What Is Market Segmentation?

Market segmentation is the process of grouping potential customers together based on shared characteristics. This allows companies to tailor products and services to meet their needs.


Companies that fail to perform market segmentation run the risk of running marketing campaigns that don’t resonate with their target audience. This can result in a loss of revenue and business growth.


Demographic segmentation is one of the most common ways to divide a market into groups that share certain characteristics. This approach can be used to create more effective marketing campaigns by identifying which messages will appeal to the target audience and which products or services may be best suited for each group. Demographics include factors like age, gender, income, occupation, family size, and nationality. Demographic segmentation can be performed using consumer insights, analytics software, and census data.

Companies can use demographic information to create targeted marketing campaigns and improve customer retention. They can also use demographics to determine the best channels to reach potential customers. However, it’s important to avoid delivering marketing messages that are based on stereotypes, as this can turn off and alienate the audience.

For example, a company that sells athletic clothing would benefit from marketing its product to individuals who enjoy playing sports or watching sports events. But the company should not market its product to sports fans who prefer a different sport, such as swimming or tennis. In addition to demographics, companies can divide the market based on life stage or family size. For example, a phone service provider might offer family plans for families with multiple children, while a grocery store might provide discounts on food items that are consumed more frequently by larger households.


Psychographics are the intangible characteristics of a customer that make them different from other customers. These include thoughts, attitudes, and opinions. These are harder to collect and analyze, but they provide a more comprehensive overview of your target market than demographic and behavioral data alone.

The most common way to conduct psychographic market segmentation is by asking your customers questions about their values, opinions, and attitudes. This can be done through online surveys or offline interviews. This type of data is hard to gather, but it is one of the most valuable pieces of information that a business can obtain.

Another way to collect psychographic market segmentation data is through customer purchase histories. This can tell a company a lot about the customer’s preferences and needs, which can be used to create more targeted marketing campaigns. Psychographic segmentation can also be conducted through the use of customer analytics tools.

You can collect this data through layered lead capture experiences, such as those that Yieldify offers. These experiences can capture a variety of psychographic characteristics, including a customer’s social status, daily activities, and opinions about specific topics. These characteristics are a great way to identify high-quality leads, and they can be used to optimize your marketing campaigns. The future of psychographics is bright, despite the recent Cambridge Analytica scandal.


The attitudes of consumers are the beliefs they hold about products, brands and companies. These beliefs have a significant impact on their purchasing decisions. A savvy marketer can use these attitudes to develop an effective marketing strategy. Marketers can determine the attitudes of consumers through written surveys using a measurable scale, or they can conduct interviews and focus groups with customers to gather more detailed information. Psychographic characteristics such as personality and lifestyle can also influence the attitudes of consumers. For example, an extroverted person may be more likely to make buying decisions based on feelings and opinions than a shy person.

Attitudes can be hard to measure, however, and are often subjective. For example, a person might say that they have a positive attitude toward mopeds, but he or she might not really believe it. This can cause problems in market research, because it is hard to predict whether a consumer will act on his or her attitudes.

Businesses can use market segmentation to identify specific attitudes that have a significant impact on purchasing decisions. For instance, if a business knows that high-income consumers believe its products are low quality, it can use different techniques to try to change those negative attitudes and increase sales. For example, the business might run a series of advertising campaigns to promote its product as an excellent value or offer free trials in stores.


Market segmentation is a powerful tool for improving marketing and sales effectiveness. It creates smaller groups of potential customers and focuses on their needs to improve conversion rates and develop services and messaging that are more in tune with their needs. It also helps companies to focus resources and avoid distractions that may divert attention from the goals of their business.

One way to segment the market is to use behavioral characteristics, which are based on consumer actions and decision-making patterns. For example, a clothing retailer might display more raingear in its stores located in the Pacific Northwest and less in its Southwest stores. This can be done based on the weather in each region or on other factors that influence buying decisions, such as local sports teams or popular culture.

Another way to segment the market is to use psychographic characteristics, which are based on consumer lifestyles, opinions, and interests. This type of segmentation is more difficult, as it requires a deeper understanding of customer needs and desires. However, it can yield the strongest market segmentation results.

Segmenting the market based on buyer behavior can help you develop targeted marketing campaigns and personalized experiences that lead to increased customer loyalty and higher revenue. It can also help you understand what features your product or service doesn’t have that other competitors do and develop a plan to address those gaps. And it can help you reduce customer churn and build brand loyalty by identifying your target audience’s pain points.