What is Market Segmentation?

Market segmentation is the process that companies use to divide a large, diverse market into smaller, more homogeneous groups called "segments." This segmentation involves examining customer characteristics and behaviors in detail, which helps companies offer products and services tailored to meet the needs of each group individually.

Importance of Market Segmentation

 

1. Better Understanding of Customers and Their Needs
   Market segmentation helps companies gain a detailed understanding of their customers and their needs. Through segmentation, companies can identify the most loyal customers and target them with specialized marketing messages.
2. Determining the Optimal Price
   By segmenting the market, companies can determine prices that suit each customer group. Some segments may be willing to pay higher prices for slight improvements in quality, helping to increase returns.
3. Creating More Value
   By dividing the market into smaller groups, companies can launch more personalized and effective marketing campaigns. Improving each sector individually is more effective than improving the entire market as a whole.

Types of Market Segmentation Criteria

 

1. Geographic Criteria
   This type of segmentation relies on identifying the geographic location of customers. It allows brands to design marketing campaigns that are suitable for the location and climate conditions of the consumers.
2. Demographic Criteria
   Segmenting the market based on demographic characteristics includes measurable factors such as age, gender, marital status, education, income, and profession. This type of segmentation is the most widely used due to the ease of data collection.
3. Psychographic Criteria
   This segmentation focuses on the lifestyle of customers, such as their interests, values, and personalities. To obtain this information, surveys or questionnaires are often required.
4. Behavioral Criteria
   Behavioral segmentation depends on customer behavior, whether it’s their online behavior (such as time spent on the site, pages visited, exit times, and types of visits) or their behavior in physical stores (such as the number of visits, purchase history, and order sizes).

Conclusion
Market segmentation is a crucial step in the marketing strategy that companies rely on to better understand the needs of their customers. This segmentation helps in targeting specific customers by tailoring products and services, contributing to improved engagement and increased sales.