A market segment is a grouping of consumers or businesses within a particular market that has one or more things in common. By exploring various market segments, you can begin to form a clear picture of your target market. A target market often includes more than one market segment. Here are some ways you can group customers into market segments.
Group Your Segments by Demographics
You may choose to base your segments on demographics. Demographics are objective social and economic data about people. Demographics for consumers include age, gender, marital status, family size, ethnic background, education, occupation, annual income, and whether they own a home or rent. Demographics for businesses include industry type, number of employees, and annual sales. If you are a B2C company, it may be best to focus on the consumer demographics, while if you are a B2B company you will want to focus on the business demographics.
Develop Your Segments by Geographics
Basing market segments on where consumers live or where businesses are located is called geographics. Groupings could include the nation, geographical region, individual state or province, county, city, neighborhood and type of climate.
Frame Your Segments by Psychographics
Psychological characteristics of consumers, such as attitudes, opinions, beliefs, interest, personality, lifestyle, political affiliation, and personal preferences, are called psychographics. An example of psychographics for businesses is how much they are employee oriented or customer oriented.
Buying patterns are often influenced by a combination of market segment characteristics. The method and data sources you choose for your market research largely depend on what type of information you require. Choose your market segments wisely, and you may discover hidden gems of information about your target customer.