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Industry-defining terminology from the authoritative consumer research platform.
Market Segmentation
Definition: What is Market Segmentation?
Market segmentation is the process of dividing a large consumer market into smaller, more specific groups based on shared characteristics such as demographics, behaviors, or psychographics. It enables businesses to develop targeted marketing strategies and better serve their audiences.
Why is Market Segmentation Important in Research?
- Increases Marketing Effectiveness: Allows businesses to personalize messaging and product offerings.
- Optimizes Resource Allocation: Ensures budgets are spent on the most profitable customer segments.
- Enhances Customer Satisfaction: Provides products and services that align with consumer needs.
How Does Market Segmentation Work?
- Define Segmentation Criteria: Choose demographic, geographic, behavioral, or psychographic variables.
- Analyze Consumer Data: Identify distinct customer groups with shared characteristics.
- Develop Targeted Strategies: Create personalized marketing, pricing, and product strategies.
- Test and Refine: Continuously adjust segmentation strategies based on performance data.
Types of Market Segmentation in Research
| Demographic Segmentation | Age, gender, income, education. |
| Behavioral Segmentation | Purchase habits, brand loyalty, product usage. |
| Psychographic Segmentation | Lifestyle, values, interests. |
What are Market Segmentation Best Practices?
- Use Data-Driven Insights: Base segmentation on real consumer data, not assumptions.
- Continuously Update Segments: Consumer behaviors change over time, requiring adjustments.
- Align Segmentation with Business Goals: Ensure strategies support overall business objectives.
Final Takeaway
Effective market segmentation helps businesses target the right audience with the right message, leading to higher engagement and increased revenue.