Market Segmentation – Understanding Your Audience and Uncovering New Markets

Market segmentation allows you to understand your audience and create a marketing message that will resonate. It can also help you uncover new markets that you may have overlooked.


A successful segmentation approach yields robust data sets that other departments can use to drive growth for the company. These include: geographics, demographics, behavioral, psychographic, and lifestyle bases.


Demographic segmentation is the process of grouping consumers based on their shared characteristics. This method allows marketers to create more relevant advertising campaigns that will appeal to specific groups of consumers. It is one of the most common methods of market segmentation, and it is usually based on data that can be collected through consumer insights, analytics software, and census data.

It is important to note that demographics do not always reflect a consumer’s true needs and preferences. For example, age is a key demographic that can be misleading when it comes to purchasing decisions. For example, baby boomers and generation X might share similar interests, but not necessarily the same preferences when it comes to mobile phones. Similarly, gender is an important demographic that can influence buying decisions, but marketers should be cautious about reinforcing stereotypes with their marketing.

Other demographic factors that are often used in market segmentation include education level, occupation, and family makeup. For instance, a college degree may indicate that the individual is likely to be more interested in products with a technical nature, while an occupation may suggest that the person is more likely to prefer a product with a more humanistic focus. Finally, the family makeup of an individual can be a good indicator of their shopping behavior and pain points. For example, a single person is likely to prioritize their own personal needs, while a couple who just had a child will probably make family decisions first.


Behavioral market segmentation is an in-depth method of grouping customers into different categories based on their actions. It can help marketers understand customer needs and improve their marketing strategies. It also helps identify which products or services are most effective in a particular audience, making it a valuable tool for increasing sales and lowering churn rates.

It involves analyzing data on user behaviors and patterns, such as how often they use your app, what features are most popular, and how long they stick around. This information can be used to create personalized messages that target your top users. The goal of this type of segmentation is to increase engagement and retention rates by reaching the right users with the right message at the right time.

There are several types of behavioral market segmentation, including occasion purchasing, recurring personal occasions (like birthdays and anniversaries), seasonal purchases (such as holiday decorations and gifts), and daily purchases (like coffee or food). This can help businesses make better decisions about their marketing strategy and products.

Incorporating behavioral market segmentation into your business can help every department understand your customers on a deeper level. It can also help them develop a more targeted marketing strategy and deliver key insights to your business partners.


Psychographic market segmentation is a powerful method that can help marketers understand their customers. By identifying the top concerns that prevent your target audience from purchasing your product, you can improve your customer personas and develop products that better align with their needs. This insight can also help you refine your marketing strategies and improve your communications with your customers.

Psychographic data differs from demographic and behavioral information in that it focuses on the underlying personality and psychology of your target audience. It can also reveal hidden motivations that might not be visible from their actions. For example, two “in-their-fifties,” caucasian family men living in the Dallas upper-middle class can look nearly identical but may have very different underlying motivations.

A good way to collect this data is through a survey. A well-designed survey will ask questions about the respondents’ personality traits, daily habits, interests, and opinions. It will also ask about their biggest challenges and goals. For example, a survey could ask how many hours a week the respondent sleeps and what their biggest goal is for the next year.

This type of market segmentation is also called internal segmentation and is based on a company’s understanding of its customers. For example, a company might identify that its customers tend to purchase home decor and fragrance products. It might then use this information to create targeted campaigns.


Lifestyle is a broad category that includes your pursuit of interests such as hobbies, your view of fashion and social fulfillment in areas such as friendship, community and family. It also includes your attitudes toward things like wealth and status. It’s important to understand the various aspects of your customers’ lifestyles because it can affect their buying patterns, product preferences and even their emotions.

Marketers can use lifestyle segmentation to create customer personas and advertising campaigns that align with their customers’ values and interests. They can also use it to understand how customers interact with their products and services and identify any gaps in their offerings that need attention.

Segmenting your market by lifestyle can help you develop marketing strategies that are more relevant to your customers’ beliefs and values, which in turn can lead to higher sales and customer retention. It can also reveal new opportunities in your market, such as uncovered needs that can be addressed with a different type of product or service.

When you’re planning to use a lifestyle segmentation approach, it’s important to understand your team’s goals and the best way to gather the data you need. For example, you may want to test your model using focus groups or surveys. Then, you can decide on a final strategy that suits your business needs and your customers’ lifestyles.