Example of Market Segmentation: A Guide

Example of Market Segmentation

You launch a new product and want to get customers for it. How do you start? Most businesses will try to sell to everyone. But here’s the rule of business. If you try selling to everyone, you’ll end up selling to no one. You need to identify your target audience and create your strategy around them. This is an example of market segmentation.

Market segmentation is an important marketing strategy. It’s essential for new businesses that want to sell their products in a competitive market.

Here’s a quick guide to market segmentation, along with its types and examples.

What Is Market Segmentation?

Market segmentation is a strategic approach of dividing a large customer base into a smaller, more targeted customer base. The division occurs depending on your customers’ characteristics, demographics, interests, and buying behavior.

Here’s an example of market segmentation. For instance, suppose you are a digital marketing company looking for clients. Ideally, your target customers will be businesses looking for digital marketing services. But you can’t approach all the businesses.

Some companies will have a lower budget, and some will have enormous spending power. Some businesses will want to outsource only a few services. Others will outsource their entire marketing operations.

You need to determine who wants to serve. Since you’re a new service provider, you may not get large enterprises with massive budgets. Hence, your best target market will be small businesses. Such companies don’t have the resources to handle their marketing processes. Based on your team skills, you can decide whether you want to provide selected marketing services or complete marketing operations.

That’s how market segmentation works, and it applies to any business. Whether you’re a service provider, retailer, manufacturer, or freelancer, you can leverage market segmentation to find high-paying consumers.

Type and Example of Market Segmentation

A business can segment its target market based on various factors. These include location, buying power, occupation, gender, age, and more. The criteria you use to segment your customers will depend on your requirements.

Example of Market Segmentation
Example of Market Segmentation

However, there are four common types of market segmentation businesses readily use. Let’s look at these types, along with an example of market segmentation from each category.

Example of Market Segmentation: Geographic Segmentation

Geographic segmentation means dividing your potential customers based on geography or location. You can segment your customers based on their country, region, city, or postal code.

Geographic segmentation is essential when your product or service applies to a local audience. It works well for offline events such as live conferences, in-store promotions, etc.

Example of Market Segmentation

For instance, suppose you offer home improvement services, such as cleaning, roofing, landscaping, etc. Since you’re a local service provider, promoting your business to a global audience won’t make sense. You should only target consumers in the area where you provide services.

Here’s where geographic segmentation comes into the picture. You can segment your consumers based on their location. For instance, if you offer services in New York only, you can show ads or send emails to people based in NYC. Almost all ad networks, including Google Ads and Facebook Ads, allow you to show location-based ads.

Behavioral Segmentation

Behavioral segmentation refers to dividing a group of customers based on their behavioral characteristics. Hence, it focuses on how users react to your brand or product. You can segment your customers based on various behavioral traits, such as:

  • Buying habits
  • Spending habits
  • Browsing habits
  • Previous purchases
  • Previous product ratings
  • Brand interactions

Tools like Google Analytics allow you to analyze your customers based on their behavior. Also, you can examine various behavioral patterns in the form of:

  • Total sessions
  • Pages visited
  • Time spent on site
  • URLs opened
  • Traffic sources
  • Campaign history

Example of Market Segmentation

Retargeting is a great example of market segmentation based on user behavior. You can run retargeting campaigns to show ads to users who have visited your website before. This way, you engage people who have interacted with your brand earlier.

Here’s another example. For instance, suppose you are an eCommerce business. You can send product promotion emails to customers who have purchased from your site before.

Psychographic Segmentation

Psychographic segmentation is all about dividing customers based on their interests and requirements. Therefore, it’s usually the default market segmentation strategy for all new brands that target a global audience. Psychographic segmentation comprises the following factors:

  • Beliefs
  • Values
  • Personality traits
  • Life goals
  • Lifestyles
  • Hobbies

Companies need to conduct in-depth research to segment their customers based on their psychographic characteristics. Thus, you need to know the problems they are facing and the solutions they need. It also involves understanding the emotional state of the consumers and then catering to them.

Example of Market Segmentation

The car industry is a great place to find an example of market segmentation based on psychographics. For instance, luxury car companies like Mercedes and Lamborghini do it all the time. They target customers according to their lifestyles and life goals.

Demographic Segmentation

Finally. we have demographic segmentation. It’s a common approach where you divide customers based on their:

  • Age
  • Gender
  • Income
  • Occupation
  • Ethnicity
  • Religion

Thus, demographic segmentation is broad and ideal for new businesses that want to reach a large customer base.

Example of Market Segmentation
Example of Market Segmentation

Example of Market Segmentation

You can find an example of demographic segmentation in every business or industry. For instance, suppose you sell fashion and apparel products for females. Your products are high-end and cater to high-income individuals. Furthermore, your products are best suited for young women aged 18-34.

So, that’s it. You have your demographic characteristics, which include:

  • Gender: Female
  • Age: 18-34 years
  • Income: Depends
  • Occupation: Job or business
  • Ethnicity: N/A
  • Religion: N/A

Moreover, the best thing about demographic segmentation is that you don’t need to do any research. You need to understand your product well. Then, you can come up with the demographic characteristics of your target customers.


In the end, segmenting your customers is usually the first step of any successful marketing strategy. It lays the foundation of all your search, display, and retargeting advertisements. Thus, it’s essential to segment your customers the right way.

Businesses generally segment their customers based on their behavior, demographic, geographic, and physiographic characteristics. However, you can explore other traits as well, such as technographic, generational, transactional, and firmographic segmentation.

So, how d’you like to segment your customers?

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