4 Types of Market Segmentation [The Ambrosia Ultimate Guide]

Market segmentation analysis is the process of dividing a market into smaller, homogeneous groups of consumers who share similar characteristics and needs. The purpose of conducting market segmentation analysis is to understand the behavior, interests, preferences, and needs of different customer segments, which can ultimately help companies tailor their marketing strategies to the specific needs of each segment.



Various types of market segmentation analysis exist, including demographic segmentation, geographic segmentation, psychographic segmentation, and behavioral segmentation. Demographic segmentation divides customers based on demographics such as age, gender, income, and education. Geographic segmentation focuses on the geographic location of potential customers. Psychographic segmentation involves understanding customers’ lifestyles, attitudes, and personality traits. Behavioral segmentation examines customer behavior, such as buying patterns and product usage.

Each type of market segmentation analysis offers unique uses and benefits. For instance, demographic segmentation helps identify a customer’s income level or family size. Geographic segmentation assists in pinpointing customers more likely to purchase products based on their location. Psychographic segmentation aids in comprehending customers’ interests, values, and attitudes toward products. On the other hand, behavioral segmentation considers customer behavior, such as loyalty or buying frequency.

What are the typical methods of market segmentation used in analysis?

Companies use market segmentation as a technique to divide their customer base into subgroups with similar characteristics. They commonly employ types of market segmentation such as demographic, geographic, psychographic, and behavioral segmentation. These segmentation methods enable businesses to enhance their ability to target and understand their customers, enabling them to customize their marketing strategies and products to meet specific customer needs. Market segmentation also aids companies in identifying potential market opportunities, enhancing customer satisfaction, and making informed decisions about their marketing mixes and plans. In this article, we will delve into the common types of market segmentation in analysis and explore how each type can drive successful marketing efforts.

Demographic segmentation

Demographic segmentation is a market segmentation method that takes into account the unique characteristics of the target demographic, including age, income, gender, race, education, and occupation. This allows marketers to tailor their marketing strategies to better suit the interests and preferences of their intended audience.

Demographic segmentation commonly employs age as one of its most prevalent criteria. Moreover, companies often target children with products such as toys, children’s clothing, and video games. In contrast, older adults become the focus for products such as anti-aging creams and Medicare supplements. 

Additionally, income assumes significance as it can establish a customer’s spending power. Specifically, high incomes lead to the marketing of luxury products like high-end cars and expensive jewelry, whereas lower incomes prompt the marketing of budget-friendly products such as generic groceries and discount clothing. Furthermore, gender plays another pivotal role in demographic segmentation, determining the specific needs and preferences of men and women. Consequently, products such as razors, shampoos, and perfumes frequently undergo distinct marketing approaches for men and women.

Education and occupation are two other essential characteristics of demographic segmentation. These factors can help identify customers with specific professions or levels of education that may be ideal for the product. For example, MBA programs are marketed to professionals with bachelor’s degrees, while specialized tools like stethoscopes are marketed to medical professionals.

Geographic segmentation

Geographic segmentation is a segmentation approach that divides a market based on physical location. This approach recognizes that consumers living within the same region often have similar needs and preferences. As a result, marketers can tailor their marketing efforts to specific geographic locations to better meet the needs of buyers in those areas.



For example, a beverage company may use regional marketing to target a specific region where their product is the most popular. They may use local marketing to appeal to the unique tastes of consumers living in a particular city or town. Geographic segmentation can be achieved through many types of geographic data such as country, region, state, city, and even neighborhood.

The type of data used will have a significant impact on the marketing strategy of a firm. For example, a company that sells snow equipment will specifically target markets with snowy climates like Colorado. In contrast, a beachwear company will aim its marketing efforts at locations such as Florida or California. This type of segmentation not only assists firms in customizing their marketing message to regional preferences but also helps them avoid using a broad approach that could potentially endanger sales in certain areas.


Behavioral segmentation

Behavioral segmentation is a method used by marketers to categorize customers based on their behaviors during brand interactions. This enables them to identify patterns in consumer behavior and customize their marketing strategies accordingly.


One way to group customers using behavioral segmentation is by examining their spending habits. This includes analyzing the frequency and amount spent on purchases. Another factor to consider is purchasing habits, such as whether consumers make purchases in-store or online, if they research products before buying, or if they purchase on impulse. Browsing habits can also provide insight into customer behavior, such as how often and for how long users interact with a website or app.

Interactions with the brand can also be used for segmentation, including data on whether consumers engage with the brand on social media, if they leave reviews or ratings, or if they participate in loyalty programs. Customer loyalty is another behavioral indicator, allowing marketers to identify customers who make repeat purchases or those who have a higher likelihood of returning to the brand.


To gather this data, marketers can use surveys, customer feedback, social media analytics, and other marketing research techniques. Leveraging this data requires developing hypotheses about customer behavior, testing those hypotheses, and using the findings to personalize marketing recommendations that address the customers’ needs and preferences.

Psychographic segmentation

Psychographic segmentation involves grouping customers based on their attitudes, values, interests, and lifestyle choices. This type of segmentation considers customers’ personality traits, hobbies, opinions, and other psychographic factors to understand their motivations and behaviors.

For example, a company selling adventure gear may segment its customers based on their love for outdoor activities, interest in extreme sports, and willingness to take risks. Another company selling luxury fashion items may segment customers based on their desire for exclusivity, appetite for high-end products, and the importance they place on fashion in their lives.

Psychographic segmentation helps in understanding customers better by providing insights into their motivations, decision-making processes, and lifestyle choices. This understanding enables marketers to create targeted marketing campaigns that resonate with specific customer segments, resulting in better engagement and increased sales.


Some of the characteristics that are used for psychographic segmentation include lifestyle habits, values, opinions, interests, personality traits, and attitudes. Lifestyle habits include aspects related to work, entertainment, and hobbies, which can indicate preferences and needs. Values and opinions refer to the customer’s beliefs and views on specific topics, which can provide insight into their motivations and behaviors. Habits refer to the behaviors that customers perform repetitively, which can help identify their needs and preferences.

Ensuring effective segments

Effective market segmentation requires careful consideration of various factors to create focused marketing strategies that maximize profitability. To ensure that your market segments are effective, they need to be measurable, accessible, substantial, and actionable.

Firstly, your market segments should be measurable, meaning they should be directly related to purchasing a product. This allows for the possibility of quantifying the segment size and assessing potential profits from that segment.


Secondly, your target market segments should be accessible. This means that marketing efforts should be able to reach these customers in a cost-effective manner. If a segment cannot be accessed, there is no way to implement a marketing campaign, and potential sales will be lost.

Thirdly, your target market segments should be substantial. This means that the segments’ customers should have the potential to purchase the product. Focusing on a small, niche market may not always guarantee financial viability, so it is important to ensure the size of the segment is adequate enough to generate significant revenue.

Lastly, your market segments should be actionable. This means that these segments should be quantifiably different from other segments, producing differential responses to marketing campaigns. This information can then be used to adjust marketing strategies and increase profitability.

In Conclusion

Overall, by ensuring that your target market segments are measurable, accessible, substantial, and actionable, you can create effective marketing strategies that yield maximum profits, resulting in a successful market segmentation analysis.

If you have any more questions about this process, or want more personal advice, feel free to  schedule a one-on-one call with one of our consultants.

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