What is Market Segmentation and Its 4 Types? (with Examples)
Segmentation is a popular tactic among marketers. It helps them create long-term plans with ease and maximum return, as it makes companies 130% more likely to understand their customers. It provides a comprehensive view of users, such as demographic, geographic, and more.
This may sound a lot, but don’t worry! This blog will help you understand segmentation and its types with examples. Let's get started!
What is Market Segmentation?
Market segmentation is the process of identifying people with the same interests into segments or groups.
In simple words, it’s bringing people of common interests, characteristics, and needs together. Doing so helps marketers create more personalised and targeted campaigns. SalesMango data reveals that 77% of marketing ROI comes from segmentation. Some major benefits of segmentation in notifications are as follows:
- Improved Relevance: Segmented notifications allow you to send content that is highly relevant to each group.
- Higher Engagement: Recipients are more likely to engage with content that is directly related to their interests or needs.
- Personalisation: Segmentation enables personalisation, which is a key driver of effective communication. You can address recipients by their names, reference their past interactions, and provide recommendations or offers tailored to their preferences.
- Increased Conversion: Since segmented notifications are more relevant, personalised, and timely, they are more likely to lead to conversions. This could be in the form of product purchases, app downloads, sign-ups, or other desired actions.
- Cost Efficiency: Segmentation can lead to cost savings by optimising your messaging efforts. You can focus resources on the most promising segments rather than blanket messaging to a broad audience.
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Types of Market Segmentation
Segmentation can vary according to business requirements and goals. The major categories of segmentation for marketing campaigns are the four mentioned here:
1. Demographic Segmentation
This is one of the most popular approaches to segmenting users. It defines the “who” segment of your targeted customer. In demographic segmentation, you learn about users' general details such as age, sex, marital status, occupation, family size, qualification, race, income, nationality, and religion.
Take the example of e-commerce clothing retailer tailors. They run email marketing campaigns based on the age and gender of their customers.
Here, demographic segmentation helps them identify age-specific segments of users. They send different promotional offers for trendy women's clothing to female customers in their 20s and 30s. On the other hand, offering discounts on men's apparel to male customers of similar age groups.
2. Behavioural Segmentation
Behavioural segmentation is the process of grouping customers based on their interaction with your brand. The common behaviour of customers helps them design different categories.
These may include their spending habits, purchasing habits, browsing habits, loyalty towards their brand, interactions with the brand, and feedback.
Example: A music streaming service analyses user behaviour to send personalised playlists and music recommendations. For users who frequently listen to classical music, they create playlists featuring classical compositions. For those who prefer hip-hop, they offer playlists with the latest hip-hop tracks.
3. Geographic Segmentation
As its name suggests, geographical segmentation defines customers based on their locations. It reflects the “where” factor. According to this approach, people living in the same city, state, or zip code can have similar interests and needs.
Furthermore, there is a similarity in culture and preferences. That's why most major food chains revolve around this concept. They may offer a variety of food, but they do have room for the cultural food of that locality.
Example: A fast-food chain uses geographic segmentation to offer location-specific deals. They send mobile app notifications to customers in a particular city, promoting a special discount available only at that city's branches.
Apart from this, it helps in geo-targeting visitors locally and globally. Google Maps' “near me” feature is in line with geographic segmentation.
4. Psychographic Segmentation
Psychographic segmentation depends on the “why” factor. In this segmentation, marketers group people based on their personal values, political opinions, aspirations, and psychological characteristics.
Many popular brands are using psychological segmentation in their marketing campaigns.
For example, a high-end car manufacturer uses psychographic segmentation to target customers with a luxurious lifestyle. They market their vehicles to individuals who value status and premium experiences. Their messaging campaigns emphasise luxury, sophistication, and exclusivity.
Use Notifly to Make Segmentation Easier
We hope you found this blog useful and that it helped you understand the concept of market segmentation and its types. Essentially, these four categories of segmentation give businesses a clear understanding of their users. Further, it helps you optimise your marketing strategy. If you are willing to learn more about its benefits, check out this page on Notifly segmentation capabilities.
