Marketing Strategy

Market Segmentation Definition – with (Examples, Types, Bases, Importance, Process)




Success and failure of a business in the final market highly depend on effective and efficient market segmentation. Most of the cases it is found, the marketer has a quality product, competitive low-price ability, creative promotional tools, and strong distribution facilities but they cannot do well in the market just because of ineffective market segmentation strategy. Market segmentation decision has a great impact on business. Today, this section discusses the market definition, a real example of market segmentation, type of market segmentation or based on market segmentation (demographic segmentation, behavioral segmentation, psychological segmentation, geographic segmentation), market segmentation process, criteria of effective market segmentation.

Market Segmentation Definition:

Market segmentation consists of two words, one is market (A group of actual and potential buyers for a product and services) and another one is segmentation (Dividing a market into different sub-group having similar characteristics). So, the meaning of market segmentation is the ways of dividing a market into sub-groups where each of the sub-group shows the same behavior in their age, income, choice & preference, thought process and purchase decision. To know more about market segmentation, visit wikipedia.



Example of Market Segmentation:

Luis Fashion Ltd. divides their garment market on the basis of the customer gender status (Male & Female) than their age (Kids, Childs, Teen Ager, Young, Adult, Old) than their income level (Low, middle & high).


Type of Market Segmentation or based on market segmentation:

A market may be segmented in various ways on the basis of product or service nature i.e. consumer product or service product and marketing goals. Most of the cases marketer uses more than one segmentation techniques for getting better results from the market. The marketer can follow these segmentation techniques given below:


1. Demographic Segmentation:

Dividing a market on the basis of customers demographic factors i.e. age, gender, income, family size, occupation, race, religion, and nationality.

  • Customer Age: Below 6 years (Kids), 6 to 12 years (Childs), 13-19 years (Teen Ager), 20-34 years (Young), 35-60 years (Adult), more than 60 (Old)
  • Gender: Male, Female, common gender
  • Income: Low income, middle income, high income
  • Family Size: 1–2, 3–4, 5+; Dove Shampoo: Minipack, Small, Medium, Large or family size.
  • Occupation: Businessman, Farmer, Service Holder, Doctor, Lawyer, Labor, Industrialist, Celebrity, etc.
  • Religion: Muslim, Hindus, Cristian, Buddhist, etc.
  • Race: Black, white, cross, etc.



2. Behavioral Segmentation:

Dividing a market on the basis of status in life cycle stage, user status, decision-making role, benefit seeking tendency.

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  • Status in life cycle stage: Unmarried and Married, Childhood, youth, older adolescence, adulthood, middle age, and old age, etc.
  • User status: Lite user, Average User, Heavy user and Butterfly, Switchers, Stranger, Loyal customer
  • Decision-making role: Dependent or Independent decision taker or Initiator, Influencer, Decider, Buyer, and User
  • Benefit seeking tendency: Product quality, Style, Longevity, Service, Economy, Speed


3. Geographical Segmentation:

Dividing a market on the basis of customers cities, states, regions, nations, counties, sub-continent or neighborhoods.

  • Cities Size: Under 20000, 20000-50000, 50000-100000, 100000-1000000, 1000000-5000000, 10000000 or more
  • Climate: Northern, southern
  • Regions: the Middle East, Indian Subcontinent, North America, etc.
  • Density: Urban and rural
  • Nation: Francis, Indian, American, Chains, Bengali, etc.
  • Counties: USA, Chania, Russia, India, etc.


4. Generational Cohort

Dividing a market on the basis of their generation i.e. the duration between they are born.

  • Millennials (Gen Y): Birth Range: 1979–1994; Approximate Size: 78 million
  • Gen X: Birth Range: 1964–1978; Approximate Size: 50 million
  • Baby Boomers: Birth Range: 1946–1964; Approximate Size: 76 million
  • Silent Generation: Birth Range: 1925–1945; Approximate Size: 42 million



5. Psychographic Segmentation:

Dividing a market on the basis of psychological factors i.e. personality traits, lifestyle or values.

  • Personality Traits: Openness, Conscientiousness, Extraversion, Agreeableness, Neuroticism
  • Lifestyle: Level of interests, thought process, behavior pattern
  • Values: Personal values, Moral values, Aesthetic values, Universal Values, Instrumental Values, Intrinsic Values, Prerequisite Values, Paramount Values, Operative Values


6. Personal Characteristics:

  • Attitude: Innovators, Early Adapters, Late adaptors, Late Majority, Lagers


  • Customer Loyalty Status:
    • Hard-core loyal: The customer buys only a single company product for all time.
    • Riven Loyal: Specific customer group buys only two or three company products.
    • Shifting loyal: Customer who purchases a product from a different product not for a long time. Basically, purchase a company a product when competitively gets more benefits from the specific product.
    • Switchers: They are not showing any brand loyalty to the specific company product. They purchase product what actually they get their convenient areas.


Effective Segmentation Criteria:

  • Measurable: The size of the market should be measurable. Example: Total market size is one million dollars.
  • Substantial: Having with the best synergy, it should cover a huge area. Example: Size of a new car, driving sits at left or right.
  • Assessable: Easy accessibility in the segment and serve the customer.
  • Differentiable: Each segment should differ from another in size, character, and showing distinctive behavior on same marketing action. Example: Segment-A like a discounted product but Segment-B dislike the same discounted product.
  • Actionable: Marketer can design effective marketing programs for specific market segments. Example: Various credit card.

Market Segmentation Process:

The segmentation process is a series of activities involving with market definition to an appropriate sub-market division. The seven steps market segmentation process consists of defining a market for segmentation, determining objectives of segmentation, choose one or more segmentation criteria, the attractiveness of segment, the profitability of segment, an acid test of positioning traits and designing an integrated marketing program for each sub-subsegment.

  • Defining the market for segmentation: The first stage of the market segmentation process is to define the size of actual and potential customers for company products.
  • Determining objectives of segmentation: Marketer should determine the specific objectives of market segmentation. Why the company divides a market into sub-segment? For example, the Company wants to promote and distribute a quality product.
  • Choose one or more segmentation criteria: In this stage, a marketer may apply one or more segmentation criteria to divide the selected market on the basis of company objectives. Bata shows firstly divides the whole show’s market on the basis of user use purpose i.e. sports, daily use, climbing, etc. The kinds of sports i.e. athletes, footballers, cricketers, etc.
  • The attractiveness of segment: Marketer should test attractiveness of each segment by considering market size, competitive industry, market growth, market accessibility, etc.
  • Profitability of Segment: Marketer should assess market profitability. Customer base, purchasing power, and consumption pattern, cost of customer reach and return.
  • Acid Test of Positioning Traits: Marketer should test the impact of its positioning traits.
  • Designing an integrated marketing program for each sub-subsegment: Finally, marketer designing integrated product, price, promotion, and distribution strategy for entering into the market.



A marketer should take proper initiative for segmenting the market. Successful implementations of different types of segmentation criteria may enable the marketer to easily access in the final market.  It also improves the marketer’s ability to design the effective marketing program for company product. The above discusses the market definition, the real example of market segmentation, type of market segmentation, market segmentation process, criteria of effective market segmentation may improve the knowledge of a businessman and enable themselves to take right segmentation decision about it.  The logical application of the segmentation tools that are discussed in this article may ensure the success of any business and related marketing decisions.


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