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What is Market Segmentation?

Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers, businesses, or countries that have common needs, interests, and priorities.

To get the most out of your business marketing, it certainly helps to know your target audience – and that’s where you need to introduce ‘market segmentation’.

Trust us, it’s not just another buzzword, market segmentation is actually a very simple tool that can help you to kickstart your marketing strategy.

Market segmentation basically involves taking your target audience and then dividing it into more manageable customer segments. Customer segments are essentially the subgroups which all share the same characteristics.

Once you have these customer segments clearly mapped out, you can use all the information to then go ahead and tailor your strategies to meet their unique needs.

Market segmentation is a tool used by marketers because it uses relevant data to drive their marketing campaigns, making them more successful and optimising all those precious marketing dollars.

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The Benefits of Market Segmentation

It’s one thing to understand the theory behind market segmentation, it’s another to see how it can be put to good use! In a nutshell, market segmentation helps you to…

  1. Better Understand Your Customers: By breaking down your target market, you’ll have plenty of insights which can be used to ‘get-to-know’ different customer groups.
  2. Create Targeted Marketing Campaigns: Once you know who you’re speaking to, you can create messages or campaigns that will hit them right where it needs to.
  3. Improve Your Customer Satisfaction: When customers see you speaking to them, they’ll feel pretty chuffed! You’ll not only score yourself a loyal customer, they’ll want to recommend your brand to their family, friends, and followers on social media.
  4. Optimise Your Marketing Spend: Remember those marketing dollars we mentioned earlier? Marketing budgets can be stretched thin at the best of times, but when you focus your resources on the most promising customer segments, you’ll get a better return for your investment (ROI).
  5. Gain A Competitive Advantage Over Your Competition: To stand out from the rest of the pack, you’ve got to market your business to a particular set of customers.
  6. Increase Market Opportunities: You might be surprised by the nuggets of untapped or underserved customer segments that can be unearthed when you dig around in the target market research. Target these customers in a savvy way and watch your business take off!

The Types of Market Segmentation

When it comes down to the nitty gritty, a marketing strategy should be about delivering the right message to the right people at the right time – and market segmentation is a great starting point! Let’s look at the 5 main types of marketing segmentation, and how you could use them to your advantage.

Age and Life Cycle Stage

Recognises that people at different stages of life have unique needs, interests, and priorities.

For example, if you’re a tech company, marketing to teenagers might focus on the latest gadgets, social media integration, or cool new features. On the other hand, marketing to retirees would require a different approach.

For this group, you might highlight ease of use, reliability, and how your products can enhance their daily lives. By tailoring your marketing efforts to the age and life cycle of specific groups, you’ll be able to create messages that truly resonate and connect.

Income and Social Status

Is all about matching your products or services with the financial situation and lifestyle of your target customers. For example, if you’re a grocery store, you might focus on budget-friendly options for families with young children.

There’s no doubt that these customers are looking for value and affordability, so you’d want to highlight any discounts, family-sized packages, cost-saving meal plans, and how your store can help families save money without compromising on quality.

On the other hand, if you’re selling luxury handbags, you’d instead focus on affluent suburbs where customers have the disposable income to spend on high-end products. Your marketing might highlight the exclusivity, craftsmanship, and prestige associated with your handbags, appealing to their desire for premium quality and status symbols.

Tailoring your marketing strategies to the income and social status of your customers, will ensure that your messaging aligns with their financial realities or lifestyle aspirations.

Geographic Location

Geographic segmentation is a powerful tool that not only divides your market based on location (country, region, or city), local preferences, cultural differences, and climatic conditions can significantly influence customer buying habits.

Say you’re marketing a line of ready-to-eat meals, you might highlight spicy flavours and regional cuisines in areas where those are popular.

In regions where milder tastes are preferred, you simply change your marketing to focus on other types of comfort foods and traditional recipes. By leveraging geographic segmentation, your marketing messages will be culturally sensitive and locally relevant.

Psychographic Segmentation Variables

Psychographic market segmentation variables go beyond basic demographics, and instead draws on the lifestyles, values, interests, and attitudes of groups of people.

This type of segmentation digs deeper into what motivates your audience and what influences their behaviour, allowing you to create marketing messages that resonate on a more personal and emotional level.

For example, psychographic segmentation for a fitness brand might identify a group of people who value regular exercise and a balanced diet. It makes sense that the brand would tailor their marketing to highlight the benefits of their most popular products for maintaining a healthy lifestyle.

Behavioural Segmentation Variables

Behavioural market segmentation variables look at how customers interact with your brand, and their purchasing behaviour including buying frequency, brand loyalty, usage rates, and benefits sought from products or services.

For example, if you were tasked with marketing a coffee shop, behavioural segmentation might reveal a group of daily coffee drinkers all loyal to the business. With that in mind, you might decide to start a loyalty program that rewards a number of frequent visits with a free cuppa!

Simple strategies like this one that leverage marketing segmentation variables, will help you to develop marketing campaigns that really resonate with your customers’ habits and preferences.

How to Make Market Segmentation Easier

Psychographic market segmentation variables go beyond basic demographics, and instead draws on the lifestyles, values, interests, and attitudes of groups of people.

This type of segmentation digs deeper into what motivates your audience and what influences their behaviour, allowing you to create marketing messages that resonate on a more personal and emotional level.

For example, psychographic segmentation for a fitness brand might identify a group of people who value regular exercise and a balanced diet. It makes sense that the brand would tailor their marketing to highlight the benefits of their most popular products for maintaining a healthy lifestyle.

Begin Engagement Scoring

Engagement scoring with Swift Digital, helps you to identify your most engaged customers so that you can prioritise your efforts. Ultimately, you’ll be able to tailor your marketing strategies so you can nurture these more valuable relationships, and really drive home those higher conversion rates.

Utilise Data

Leveraging data is the key to accurate marketing segmentation variables. You’ll want to keep your customer database up-to-date by regularly adding new information and utilising existing data from various sources and teams. Doing so will ensure that you have a detailed understanding of your audience for more precise segmentation.

Utilise Different Marketing Channels

It’s a fact – different audiences will respond better to some marketing channels over others. To cover all your bases you should take an omnichannel marketing approach, which will create a seamless and effective marketing experience across all your usual media channels.

How Swift Digital Can Help

By incorporating these few simple strategies, you can make market segmentation easier and more impactful, helping you to connect better with your target audience in all the ways that matter.

One of the standout benefits of using Swift Digital is that all of its tools seamlessly collaborate and work together. This means your segments can be effortlessly applied across various channels like email marketing, SMS marketing, and more.

To find out how your business can get the best out of our Swift Digital marketing platform for your customer segments, contact our team today!

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