It’s inevitable that we’ll see lasting behavioral change as a result of COVID-19. But determining which of the behaviors adopted during the pandemic will stick and which will disappear once restrictions come to an end is less clear-cut.

Catch up with the findings of Kadence’s latest study by watching the recordings below. The study, powered by Dynata with 3,000 consumers in 10 markets (US, UK, China, Japan, India, Singapore, Indonesia, Thailand, the Philippines and Vietnam), is designed to help brands understand what represents a permanent, versus temporary, change in behaviors.

Watch the APAC session

Watch the UK session

Watch the US session

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It’s inevitable that we’ll see lasting behavioral change as a result of COVID-19. But determining which of the behaviors adopted during the pandemic will stick and which will disappear once restrictions come to an end is less clear-cut. According to a survey of CMOs by Dentsu, this is the number one challenge keeping senior marketers awake at night.

We’ll draw on the findings of a new Kadence study powered by Dynata with 3,000 consumers in 10 markets (US, UK, China, Japan, India, Singapore, Indonesia, Thailand, the Philippines and Vietnam) to:

  • Separate the long-term trends from the short-term fads, sharing our view on the behaviours we believe will be retained post-COVID-19
  • Discuss the opportunities and challenges these behavioral shifts present for brands
  • Explore which products and services will need to be adapted to see sustained behavioral change, taking inspiration from countries where new trends have taken hold
  • Provide you with the tools and an approach to predicting future behaviour that you can use in your own business

Sign up for the session in your market

  • APAC session – Tuesday 9th March – 12.30pm – India / 2pm – Thailand, Vietnam, Indonesia / 3pm – Singapore, Philippines, China / 4pm – Japan
  • UK session – Tuesday 9th March – 11am
  • US session – Wednesday 10th March – 11am – Pacific Standard Time / 2pm – Eastern Time

Meet our speakers

Rupert Sinclair, Insight Director, Kadence International – UK

Rupert is an expert in consumer behavior, with a passion for helping brands innovate. He’s a frequent conference speaker on the subject of innovation in market research, regularly sharing new techniques and technologies that are enabling brands to access previously untapped insights.

Gracie Igaya, Insight Director, Kadence International – Singapore

Gracie has extensive experience working on studies across Asia. Drawing on her excellent grasp of quantitative techniques, she works collaboratively with clients to deliver data driven insights, bringing her appreciation and understanding of different cultural nuances to interpret findings. Gracie has overseen high-profile studies across a range of industries including FMCG, government and education.

We are delighted to announce that Kadence International has been awarded Consultant of the Year at Marketing Interactive’s Agency of the Year Awards in Singapore.

The judges recognized our ability to support our clients in a difficult year by adopting a more consultative approach to research. This has included helping clients to:

  • Embrace digital methodologies to ensure research was able to go ahead in a year of restrictions
  • Get the most out of reduced budgets
  • Workshopping findings with clients to align stakeholders around an action plan for the future

Managing Director of Kadence’s Singapore office spoke to Marketing Interactive about the award win and what Kadence is doing differently.

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This is the second year in a row that Kadence has been recognized with an award win at the Agency of The Year Awards. In 2019, we were awarded Market Research Agency of the Year. We are delighted to see the impact of our work for clients being recognized year on year.

Kadence team collecting Agency of the Year award

Learn more about Kadence’s Singapore office or get in touch if you’d like to discuss a project with our team.

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Introducing market segmentation

There is no product or service which fits every consumer uniformly. Sometimes there needs to be variation in products to suit different people – compact smartphones for people with smaller hands, for example, or simplified apps for those not so good with tech. It could be different ways of selling a product – appealing to some people with an emotional message and others with a technical pitch.

Knowing the ways consumers behave, feel, think and make decisions can help any business tailor its products and its pitches to meet their needs more fully. By breaking down the market into segments – which share certain traits, are identifiably different from other groups, or have similar attitudes – we can find efficient and effective ways of targeting products and services.

Market segmentation is one of the most commonly used market research and analysis tools. When you call your mobile network provider, for example, you can be sure you’ve been categorized into a tailor-made customer segment, and that the interaction you have with the call center is at least in part defined by the persona you’ve been assigned. It helps them understand how to talk to you, what behaviors you’re likely to exhibit, and the types of need you’ll have.

There are three reasons organizations typically commission a market segmentation project:

  1. They feel they don’t know enough about their customers.
  2. They have some basic ideas about the types of customers they have but they can’t apply that knowledge to meet their marketing needs.
  3. They have a successful segmentation analysis but they’re finding it’s flawed in some way and needs updating.

A segmentation doesn’t just shape the way businesses deal with target customers or existing clients, it informs the design of new products and services and will dictate how they decide to reach you and with what messages. It can shape marketing campaigns and entire brand strategies.

What is market segmentation?

Once upon a time, all business was local. Consumers bought products and services from nearby providers – people from their own communities who understood their needs. There were crude forms of segmentation but they were instinctive and obvious. Salespeople from the dawn of time have tailored their messages according to who they were addressing.

About a hundred years ago, that started to change. Mass-produced goods and emerging global business models meant companies needed to understand in more detail the different markets they might address. Mass media accelerated the trend. When you could reach anyone via a newspaper ad or a TV commercial, understanding who might buy your product, why they might like it, where to reach them and what to say to them became much more important.

Then in July 1958, consultant marketer Wendell Smith wrote an article in the Journal of Marketing titled ‘Product Differentiation and Market Segmentation as Alternative Marketing Strategies’ – the first time the word ‘segmentation’ had been used in this context. He argued that understanding the basic facts, personality traits and needs of different groups of potential customers – and tailoring products or messaging to suit – would increase sales.

By the 1970s, Smith and his colleagues were using what became known as ‘psychographics’ (psychology plus demographics) to come up with classic market segmentations, such as the Values Attitude and Lifestyle Study (VALS) – featuring segments such as “innovators” (high-income, motivated by status and exploration) and “thinkers” (well-educated, thoughtful decision-makers open to new ideas). 

The forms of segmentation have evolved over time, as have the specific categories and personas that companies target. Sometimes it’s as crude as defining a target audience as a particular age group but it can also be a sophisticated analysis of deep emotional needs. Methodologies have adapted and diversified, too. But a couple of things remain constant for market segmentation projects. First, they look for definable truths about customers – reliable information that enables you to group them in useful ways. And segmentation remains a cornerstone of marketing campaigns. Segmentation allows companies to target high value consumers and position their product or brand in ways to maximize their performance. That ‘STP’ approach remains fundamental to good marketing.

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Different ways of segmenting your customer base

There are four main categories of information we can use to segment a market:

  • Geographic: where do people live? What is their environment like? What local factors might influence them?
  • Demographic: how old are they? What social groups do they fall into? How educated are they? How big is their family?
  • Behavioral: how do they make decisions? How do they use products? What are their attitudes to brands?
  • Needs based: What are their needs? What are their attitudes and values?

One of the most obvious ways to approach market segmentations is by generations. But people quickly realized that simply looking at age groups glossed over huge variation in attitudes and needs within generations. There are relatively few ways in which an age cohort behaves uniformly. You must ally demographic with behavioral and attitudinal insights to create segments that are truly useful.

This is illustrated by the rise and fall of the concept of ‘Millennials’. There have been a number of  well publicized marketing fails of companies targeting millennials. Lumping them all together – rich and poor, graduates and school-leavers, different countries and cultural backgrounds – is a major misstep. Millennials are hardly homogenous and treating them as one group risks alienating your customer base.

Why ‘needs’ make for compelling segments

We believe that identifying segments by exploring the needs of your potential customers is much more valuable than thinking about any demographic aspects. And this is why the vast majority of market segmentation projects are now needs-based. 

For example, you might discover that there’s a portion of the population whose prime need is for low-cost products; another seeks quality or status from their purchases; and some need to have products that meet exacting technical specifications.  Once you have those needs-based segments mapped, you can cross-reference by demographics or behaviors if that looks like a useful way of finding other people who might fall into those need groups.

Behaviors are harder to use in a predictive sense. They can change rapidly, especially as a result of external influences. Attitudes and needs, on the other hand, are more revealing and often more predictive. For example, we worked with one academic institution to segment their alumni in order to target graduates with a high propensity to make donations. The value of ‘attitude’ was illustrated by two graduates who both worked in finance in the City. They were the same age, had similar jobs and backgrounds. But one had enjoyed their time at the school and saw it as a springboard for their career; the other had not relished their time there and was considering a career change. The demographics said they were the same segment. But attitudinally, they were poles apart. Creating a segment of ‘inspired graduates’ made more sense than one of ‘rich bankers’.

Getting granular: what really makes a difference when it comes to market segmentation?

Working towards a granular market segmentation is important. If your category is too broad (e.g. ‘millennials’), it’s likely that you’ll capture too many different attitudes to be able to develop compelling strategies. When you mash together a lot of different colors, you just end up with brown. You need to be able to pick out individual colors – those different attitudes and needs – so they can be addressed in a compelling way. 

How you’re planning to address your different segments should also help frame your market segmentation strategy. For example, if you’re planning to promote a product through newspaper advertising or on TV, there’s a limit to how granular you need to get.

But as new ways of interacting with customers have evolved – particularly in the digital era – the value of finer segmentations has risen sharply. Today, using tools like email, targeted advertising, or big data analytics, the subtleties between segments can really make a difference.

Imagine you have a product to help pensioners release equity in their homes, for example. There’s an obvious demographic segmentation: you’re only interested in the over-65s. You need to conduct an inspection of their home when they apply and your valuers only cover the South East of England. In this situation, a geographic segmentation is a no-brainer. 

But then you know from your existing customer data that people with grandchildren are much more likely to want to free up cash so differentiating between them and the childless elderly is worthwhile. Financial literacy is also a key factor and how trusting of financial services companies they are. Risk appetite can’t be measured demographically but it might define your segmentation.

How to use market segments

So when companies debate which kinds of factors will define the customer personas – and how finely to segment their audience – the most useful question to ask is: how are you actually going to use the segments?

You might be a global business, looking to understand how the same six segments present in multiple countries. Will you actually be able to tailor the product or service around those segments? Can a central marketing function use them in the same way in every country? Or will local teams who understand the nuances of their own markets offer more valuable insights, and perhaps even more relevant segmentations of their own? 

Or if you have 15 market segments, for example, and identify seven of them as high priority targets, are you going to tailor your product around every one of them? If not, might there be more value in a more limited approach?

We were approached by a large global business who had segmented the entire personal care market in the UK, which resulted in a lot of different segments. These included people who did the minimum to appear presentable, using the cheapest products infrequently. At the other end were big spenders on grooming who were the real target for that brand’s products. 

How might that segmentation have been done differently? In terms of time and money, making a first cut to eliminate the parts of the market that have never shown propensity to buy the brand’s categories of product creates headroom for a deeper segmentation of those more lucrative parts of the population, allowing for more effective targeting.

Embarking on market segmentation? Start with what you already know

The first step of that segmentation journey is looking at what you already know about your existing customers. What is your data telling you? If you’re a pay TV network, for example, your database contains a lot of raw material for market segmentation. You can analyze by frequency of contact, whether someone has switched away and come back to you, whether they opt in to promotional emails, etc. Those kinds of factors alone are a good start to segmentation.

For example, we worked with an online dating service to comb through their database, identifying key segments based on usage patterns and other behaviors, then assigning all existing members to one of those segments. It was a powerful tool for the company’s call center operators who quickly got a sense of the type of member they were talking to from the persona that popped onto their screen, as well as targeting email marketing and much more. The segments became a lens for the business to view its own customers but also gain insights into the wider market of potential users.

A high-quality customer relationship management (CRM) system is obviously a big help. You need to be in compliance with GDPR and be responsible in how data is used, of course. (And bear in mind: if you formally assign customers to a segment, they might one day see how that’s defined thanks to GDPR’s focus on subject access rights). But allying CRM analysis with an attitudinal, needs-based market segmentation can help extrapolate the behaviors you see in existing contacts to potentially untapped audiences, too.

Many traditional (typically pre-digital) businesses have started to accumulate a lot of data about customers but struggle to make the connection between what they know about them and how that might fuel a market segmentation project. Conversely, online-only businesses are typically built from the ground up around careful segmentations, whether they emerge organically from CRM data or are built as part of a formal project.

Why market personas must be instinctive

It’s important to create segments that are meaningful. The key to a really good market segmentation is that anyone can use it. 

  • It should be intuitive – so the personas you create from your segments are recognizable and understandable.
  • It should be useful to people in different functions – whether that’s new product development, marketing, communications, sales, customer service or even the finance function.
  • It should work as well for people in the boardroom as it does for people at the front line.

That means how you brand your segments is actually a very important part of the process. We all know some famous segment names – DINKYs (Dual Income No Kids); Yuppies (Young Urban Professionals); Mondeo Man and Worcester Woman in the UK, and Soccer Moms in the US. They’re memorable and self-explanatory.

When you’re working on a market segmentation project, you need to bear in mind who’ll be using the segment analysis. That should be everyone, from the board to the call center operative. Without their buy-in (and their insights) it’s much harder to make the segmentation intuitive. Each segment must make sense to them and tell at least part of the story.

At Kadence, we also have a graphic design team in-house. The use of visuals to bring a segmentation to life is critical, not only to make it live on in the organization but to frame an understanding of the segments. We often produce documentary videos to show what kind of people are in each segment and how they behave or react.

The impact of market segmentation

What difference does market segmentation make to key decisions? Which decisions does it most affect? We see many different benefits from market segmentations. For example:

Incremental gains in congested markets. Successful products and services rely on fine-tuning to gain market share or increase sell-through with existing audiences. Segmentation allows you to identify how to exploit opportunities in underserved areas, or segments where rivals currently outperform.

Product evolution. Segmenting the market allows you to see what other underserved needs exist in groups that are already customers, allowing you to fine-tune your offer, especially if the product or service has flexible elements built in.

Targeted communications. Even email costs money (and goodwill, if it’s perceived as spam). Identifying common traits among high-propensity segments not only allows for less wasted communications, it also allows those comms to be fine-tuned for maximum impact.

Smarter automation. Customer service and call centers are increasingly reliant on automated systems. A solid market segmentation can help ensure those interactions are properly tailored and high-value segments are prioritized.

Extrapolating from the existing customer base. Market segmentation can help identify traits in existing customers that might be shared by other segments that don’t seem at first glance to be fertile markets.

New product development and launch. You might already have an idea of the types of customers a product will work for, or situations where it might be applied. You might not even need a market segmentation in the development phase but once a product or service has launched, the need to optimize its performance becomes much greater. Who’s actually using it? How? Why? Those early adopters (another classic segment) can help define and exploit other segments of consumers.

The role of market segmentation within your long-term strategy

A market segmentation project, done right, is extremely valuable but it’s also a significant undertaking. Segmentation studies aren’t designed to be done every year – ideally it should have a five or even ten year shelf life.

Even then, some events are so huge as to require a fresh look at segmentation. The Covid-19 pandemic has prompted many businesses to refresh their buyer personas. For the bulk of 2020, people’s lives have been artificially constrained. How someone behaves or reacts, what they prioritize in life, and even what values they have, are all affected by ‘not going out’. 

Even when lockdowns (hopefully) abate in 2021, how the market breaks down for previously predictable products – from personal grooming and alcohol, to cars and holidays – is going to be quite different to what went before. And it’s very unlikely the old segments will move to adapt to the new reality in precisely the same ways.

We’ve already seen some significant pandemic-inspired segmentation projects, with brands wanting to understand how their market breaks down now that people are eating out much less and work-from-home consumers are shopping differently. Previous segments might not be helpful: do you need to re-cut by job status, for example, given higher unemployment?

It doesn’t matter whether you’re targeting niche markets and need to understand where to find them, or want to tailor a broad-based approach to maximize penetration among different personas, an effective segmentation will set you up for success. Find out more about our experience in running market segmentation studies, or get in touch with our team to discuss a specific challenge. 

The purpose of market segmentation is to group customers with similar attributes together so that businesses and brands can understand their wants, needs, and behaviors so that they can ultimately market to the segments that make the most profit. Market segmentation studies are a form of market research that helps brands understand the distinct groups of people that make up their target audience. They work by grouping customers with similar characteristics. This allows companies to identify and target the segments with the most value to the business.

Companies or brands who ignore segmentation as part of their research and marketing strategy run the risk of wasting marketing dollars, or running campaigns that do not resonate with a profitable or worthy segment.

Market segmentation is a process through which a market is divided into various groups based on the demographic, geographical, psychographic, and behavioral attributes of the population. Market segmentation is extremely important for brands because it is not possible to fulfill the wants, needs, and desires of all potential customers with a single marketing message. It is the process used first before target marketing.

One of the big questions we get asked about this type of research is “what is the purpose of market segmentation?”

It’s not uncommon to hear people asking:

  • “What’s the value of focusing in on specific segments rather than trying to appeal to the mass market as a whole?”
  • “Surely, my best chance of success comes from targeting anyone and everyone that could buy my product, rather than on particular groups?”

In short, we don’t believe it does. Market segmentation can be a powerful tool for any business. Targeting specific high-potential segments makes commercial sense and boosts the bottom line. Why?

First of all, not all customers are of equal value to your business. Imagine you’re a charity. Not everyone gives equally. They’ll be those that donate small amounts every now and again. They’ll be others that consistently contribute bigger sums, driven by a connection to your cause. It makes business sense to understand the latter segment. That way you can better appeal to these people and actively target them in your fundraising and marketing campaigns.

The second is that customers are different and have different needs. This is important to recognize for a whole host of business activities – from product development to marketing to customer service. By understanding who you are targeting and shaping your strategy around their needs, you can cut through and create a better experience for your customers.

(Take a look at our guide to market segmentation for more insights on how to better understand your market).

How market segmentation studies can inform your strategy

The results of a market segmentation study can guide strategy development in the following areas:

Designing more successful products and services

Successful product and service design rely on meeting customer needs. Rather than trying to be all things to all people, focusing on specific segments allows you to really understand the pain points your target customers face. You can use this to inform product and service design, helping you to create solutions that really delight your target audiences and customers.

Developing more effective marketing campaigns

Segmentation studies help you understand who to target. They can also reveal how to speak to your target customers. The result? You’re able to spend your marketing dollars more wisely and achieve greater cut through with your comms.

There are numerous ways for marketers to segment their audiences and tailor marketing easily. Email marketing to granular digital advertising to name but a few. Against this backdrop, a one-size-fits-all approach is not enough. Segmentation allows you to create sophisticated marketing strategies based on the principle that different consumers respond to different messages.

Offering more relevant customer service

Segmentations don’t just benefit marketers. They can have an impact right across a business. We’ve worked with companies to empower their customer service reps by helping them understand the different types of customers that exist. For instance, we worked with a dating app to build segmentation and integrate it into their CRM system. That way, when a customer interacted with the brand, it was easy for the customer service team to see which segment they belonged to. This approach can be really valuable. It helps customer service reps to react in the most appropriate manner to meet the customer’s needs and the company’s corporate objectives.

Using your resources most effectively

Segmentation studies can be really useful in helping businesses understand where to focus their time, money and resources for maximum effect. Insight from a segmentation study can inform how you spend your marketing budget, determine where you focus your sales staff or how you deliver your customer service.

Whether the applications of segmentations are made to product development, marketing, service or resource/budget allocation, ultimately they help businesses to better understand their target audiences and become more customer-centric. The result (and the ultimate purpose for conducting a segmentation)? You’re able to create superior customer experiences that meet and exceed your customers’ needs.

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What does a typical market segmentation study look like?

Like all of the market research projects we work on, each segmentation is designed around our client’s needs. That said, most segmentation projects involve the following stages:

Immersion  

The first step in any successful situation is immersion. This is where the agency tasked with creating the segmentation works closely with key stakeholders in a series of workshops. The purpose of these sessions is to understand the existing knowledge within the business. This can allow you to begin developing hypotheses for potential segments. Immersion sessions align key project stakeholders, ensuring that the segmentation delivers for the business. The immersion stage also has a role in establishing buy-in to the project early on. This will encourage greater adoption of the segments in the long term

Fieldwork

Next comes the fieldwork itself. This allows the business to understand more about its customers and gather the data needed to create the segments. The fieldwork stage will typically involve a quantitative study for collecting this data. However, the research that takes place around it can differ from project to project. Some segmentations we run involve a qualitative stage upfront to test hypotheses. Other involve omnibus studies to determine the incidence of customers and non-customers in the wider population.

Creating the segmentation solution

After the data has been collected, data analytics allow us to find the survey variables which best define the segments. We work closely with stakeholders to create a segmentation solution that is:

  • Actionable (allows you to target the segments at both a tactical and strategic level)
  • Future-proofed (will stand the test of time)
  • Intuitive (easy to understand)

This stage of segmentation also typically involves understanding the current and potential value of the segments and detailed analysis to understand the individual characteristics of each segment. It’s also when the all-important segment naming takes place. Giving segments memorable names shouldn’t be underestimated. This allows people across the business to instantly grasp what that segment is about. This can be crucial for helping embed and encourage the adoption of the segments.

Bringing the segments to life

After you’ve settled on your segmentation solution, the next stage is to bring the segments to life. A lengthy PowerPoint might give the insight or marketing team the information they need. But it’s likely to be too detailed for other functions. Developing impactful deliverables that allow people to easily understand the segments should be high on your priority list if you’re leading a segmentation. This could be anything from posters to infographics. One of the key deliverables we see many organizations investing in is short documentary videos that bring segments to life. It’s human nature to be able to remember stories and characters better than numbers or data points. That’s why videos like these can really help segments live on in an organization, ensuring the segments are front of mind when making business decisions.

Activating the segments

It’s not enough to hope that stakeholders will embrace and use the segments. This process needs to be actively managed. One way to do this is by running activation workshops. This is where you work closely with individual functions to help them understand the segments and what they mean for their department and their role. These sessions are action-orientated, focused on understanding the opportunities and implications for strategic planning.

Segmentations can be powerful tools for businesses. Find out more about our capabilities in this area or get in touch to discuss a specific project.

We’ve been working with Bloomberg since the start of pandemic to understand how the priorities, actions and attitudes of business decision makers across APAC are evolving. Take a look at the infographic for the key insights from our latest wave including:

  • 67% of businesses are confident that their companies can continue to operate if another wave of the pandemic strikes
  • Brands are looking towards e-commerce and social commerce to power future growth. 87% business leaders plan to use digital platforms as their sales channels in the next 1 to 3 years, with 74% looking towards social commerce. 1 in 4 expect to decrease their use of physical stores
  • Expectations of brands are rising. 66% are looking for brands that use their resources to give back to society, up from 56% in wave 2 (June 2020)
  • The pandemic has placed greater attention on health and wellness with 55% of businesses now engaging an external partner to provide health and wellbeing services
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Market segmentation is one of the most effective ways to sharpen strategy and deliver measurable results. Rather than treating all customers the same, segmentation studies uncover the distinct groups within a market—each defined by shared behaviors, needs, or priorities. The real value lies in what happens next: brands can prioritize the most profitable audiences and tailor their efforts with precision.

Common Methods of Market Segmentation
The most widely used segmentation types include:

  • Demographic segmentation: Age, gender, income, education
  • Geographic segmentation: Country, region, climate
  • Psychographic segmentation: Values, lifestyle, attitudes
  • Behavioral segmentation: Purchase patterns, brand loyalty
  • Firmographic segmentation: For B2B, based on industry, size, revenue

Each method reveals different dimensions of your target audience, and most effective strategies combine two or more types for greater precision.

How to Conduct a Market Segmentation Study
A successful segmentation study follows a clear, structured process:

  1. Define your overall target market
    Clarify the scope of your audience and the goals of your segmentation effort.
  2. Collect data
    Use surveys, customer databases, interviews, or third-party research to gather relevant information.
  3. Analyze customer differences
    Identify meaningful patterns in behavior, needs, demographics, or attitudes that can separate one group from another.
  4. Build detailed segment profiles
    Turn raw data into useful customer segments with clear traits, motivations, and needs.
  5. Apply segments across your business
    Use your insights to guide product development, marketing messages, sales targeting, and service design.

What is market segmentation in market research?

In market research, segmentation—sometimes called marketing segmentation—is the process of identifying distinct groups of customers and understanding how best to reach them. It’s not just about splitting an audience. It’s about uncovering patterns in behavior, values, or needs that allow brands to shape products, services, and messaging that resonate more deeply.

Segmentation helps brands stop guessing. Instead of casting a wide net, they can deliver targeted strategies built on evidence—matching products and messages to the people most likely to respond. Whether the segments are based on demographics, psychographics, or needs, the goal is the same: sharper decisions across product development, marketing, and sales.

What is market segmentation?
Market segmentation is the process of dividing a broad market into smaller groups of customers with shared characteristics, needs, or behaviors. These segments can be defined by demographics, interests, values, purchase behaviors, or location—enabling brands to design more relevant products, communications, and experiences.

7 key benefits of market segmentation studies

#1 Focus on the customers that matter most

At its core, market segmentation is about prioritization. Instead of treating the entire market as a single audience, brands can identify the segments most aligned with their goals—whether that’s profitability, ease of conversion, or long-term value. It’s a shift from trying to appeal to everyone to focusing squarely on the customers who matter most.

A recent example illustrates this well. We partnered with a leading university to segment its alumni base, aiming to increase donation rates. While the common assumption might be to engage all former students equally, the data told a different story. A small group accounted for the majority of giving—proving that a one-size-fits-all approach can miss the mark entirely.

There are multiple ways to segment a market. In this case, we pursued a needs-based segmentation, analyzing alumni attitudes, values, and emotional connection to the institution. A demographic approach—such as focusing on income or profession—would have painted a less accurate picture. What made the difference wasn’t financial capacity, but sentiment: those who viewed their education as instrumental in their careers were the most inclined to give. By identifying and targeting this high-potential group, the university could channel its resources more effectively and lower donor acquisition costs.

#2 Power new product development

Market segmentation isn’t just a marketing tool—it’s a foundation for innovation. By identifying unmet needs within specific groups, segmentation studies reveal whitespace opportunities that can shape entirely new products or services. This is especially true of needs-based segmentation, which focuses on what customers actually want, rather than who they are demographically.

For brands looking to innovate, this insight is invaluable. It allows teams to move beyond assumptions and design offerings that address real pain points in the category. Whether it’s refining a product already in development or spotting demand for something entirely new, segmentation gives brands a clearer view of where to invest.

The value doesn’t end at launch. Segmentation studies can diagnose performance gaps—highlighting where a product misses the mark for certain audiences, and how it can be adjusted to better meet their expectations. In competitive categories, these insights can be the difference between a product that fades and one that pulls ahead.

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#3 Design more effective marketing

Segmentation sharpens marketing strategy by showing brands who to target, where to find them, and how to speak to them. With the right data, brands can shift from broad, inefficient campaigns to tightly focused efforts that drive greater impact for less spend.

A segmentation study might reveal that the audience you’ve been chasing with national TV campaigns is actually more active on social platforms—or more likely to engage with a niche publication. In one market, your most responsive customers may be Instagram devotees. In another, they may prefer trade magazines or podcasts. Knowing this lets you optimize spend and focus on the channels that matter.

Segmentation also enhances the message itself. Different audiences respond to different cues—price, innovation, social proof, simplicity. A targeted segmentation strategy can uncover these preferences, helping you tailor creative that resonates. For example, if you’re a telecom provider, your early adopters may want detailed tech specs, while your budget-conscious buyers care more about value bundles. Precision in messaging isn’t just about tone—it’s what drives engagement and conversion.

#4 Deliver better customer service
Segmentation studies aren’t just for marketers. When shared across the business, they become tools for customer experience, sales, and support—offering frontline teams the context they need to respond in more personalized, effective ways.

In one project, we helped a digital dating platform segment its user base based on behavior and engagement patterns. Each customer in their database was assigned to a segment, and this profile was made visible to call center staff during every interaction. The result? A support team that could anticipate needs, adapt its tone, and offer more relevant solutions—faster.

This type of approach is becoming standard in customer-centric organizations. The streaming service that suggests upgrades based on your preferences? The telco that offers a retention bonus when your usage drops? These aren’t guesses. They’re segmentation strategies embedded into service operations—designed to reduce churn, drive loyalty, and unlock new value from existing customers.

#5 Use your resources more efficiently
Segmentation also helps brands get smarter with their resources. When you know which customers are most likely to buy, respond, or convert, you can direct your teams, time, and budgets more strategically.

A sales team can prioritize outreach to the most promising segment. A marketing budget can be allocated to the events or platforms that matter most to a specific group. The focus created by segmentation reduces waste—and increases results.

This is especially powerful for small to mid-sized businesses, which often assume segmentation is only for larger brands. In reality, even a simple demographic or geographic segmentation can deliver clarity and focus. It doesn’t require a massive investment. You can start with basic behavioral data or purchase history. What matters is acting on it. When resources are tight, market segmentation becomes not just a strategic advantage—it’s a necessity.

#6 Develop a more customer-centric culture

One of the most overlooked advantages of market segmentation is its ability to shift internal culture. When done well, segmentation can help embed a deeper understanding of the target customer across departments—aligning teams around shared priorities and driving more customer-centric thinking at every level.

But that shift doesn’t happen on its own. Creating a segmentation model is only the first step. To influence culture, it must be activated—intentionally and consistently.

Start by securing early buy-in. When key stakeholders are part of the segmentation process, they’re more likely to take ownership of the findings and use them in decision-making. This is critical, especially in organizations where teams may be working in silos. Segmentation can challenge assumptions and unsettle old habits. Involving leaders early helps smooth the path for adoption.

Next, make the segments visible and memorable. They need to be easy to grasp and clearly differentiated. We’ve seen how well-designed deliverables—infographics, printed cards, interactive dashboards—can bring segments to life in a way that a presentation deck never will. These tools help keep the customer front of mind, from product development to sales conversations.

Finally, integrate segmentation into strategy and operations. We often work with functional teams—engineering, retail, marketing—to translate segments into meaningful action. A strong segmentation framework should inform everything from design briefs to service protocols. The goal isn’t just understanding customers. It’s making sure that understanding drives what people do.

#7 Foster a customer-centric culture across your organization

One of the most powerful but often underused benefits of market segmentation is its ability to reshape company culture. When executed well, segmentation doesn’t just support external campaigns—it transforms how teams think, plan, and prioritize internally.

But that transformation isn’t automatic. Creating a segmentation model is only the first step. To drive real cultural change, it must be integrated across the business with intent and persistence.

Start by securing early buy-in. When stakeholders are involved from the outset, they’re more likely to trust the outputs and use them to guide decisions. This alignment is especially important in large or decentralized organizations, where assumptions and approaches can vary widely between teams.

Second, make segmentation tangible. Visual outputs—designed for memorability and ease—can help bring each segment to life. From infographics to segment personas to interactive dashboards, these tools help ensure teams can recall and act on segmentation insights in the moment, not just in planning sessions.

Finally, activate the segmentation across departments. Whether it’s shaping product roadmaps, customizing sales pitches, or refining customer service protocols, the segmentation framework should be a core input. It’s not enough to understand your target audience—you need to build a business that acts accordingly.

Limitations of Market Segmentation

While segmentation offers significant advantages, there are a few limitations to consider:

  • Over-segmentation can lead to fragmented strategies and brand dilution.
  • Data quality is critical—poor or outdated data can lead to inaccurate segments.
  • Resource constraints may make smaller segments impractical to serve.
  • Complexity increases as more segments are introduced, especially across functions.

Frequently Asked Questions about Market Segmentation
What are the 4 main types of market segmentation?
Demographic, geographic, psychographic, and behavioral segmentation.
What are the 4 elements of market segmentation?
Measurability, accessibility, substantiality, and actionability.
What are the 4 market segmentation theory strategies?
Concentration, differentiation, mass marketing, and micromarketing.
What are the 5 main market segments?
Demographic, geographic, psychographic, behavioral, and firmographic (common in B2B).
How do you do market segmentation?
Define your market, gather data, analyze differences, build segments, and apply them to strategy.
What is an example of market segmentation?
A tech brand using behavioral data to target frequent buyers with loyalty offers.
What is the function of market segmentation?
To help businesses tailor offerings to specific customer groups for better alignment and performance.
What are the disadvantages of market segmentation?
It can create complexity, depend on strong data, and risk focusing on segments that are too small.

Ready to put segmentation to work for your brand?

Whether you’re starting from scratch or want to get more value from your existing segments, we can help. Get in touch with our team to explore a tailored approach to market segmentation that drives real results.


Market segmentation is a crucial strategy for businesses to target and cater to specific customer groups effectively. By tailoring your strategy based on the needs of your key customer segments, you can better appeal to the customers that matter most. This guide explores four key types of market segmentation: geographic, demographic, firmographic, and behavioral.

Geographic Segmentation

Geographic segmentation divides the market based on location factors such as:

  • Country
  • Region
  • City
  • Area (urban, suburban, rural)
  • Climate or season
  • Timezone
  • Language

Example: An automotive manufacturer selling four-wheel drives may target rural areas where such vehicles are more practical. However, relying solely on geographic data can be limiting as other factors like income and lifestyle also play significant roles.

Demographic Segmentation

Demographic segmentation creates customer segments based on demographic information, including:

  • Age
  • Gender
  • Income level
  • Level of education

Example: A luxury brand might focus on customers who earn above a certain income threshold, as they are more likely to afford high-end products. However, assuming that people of the same age or income level are alike can lead to ineffective marketing strategies, as demonstrated by Air France’s failed millennial-targeted airline, Joon.

Firmographic Segmentation

Firmographic segmentation is often used for segmenting B2B customers and relies on similar principles to demographic segmentation, looking at factors such as:

  • Company size
  • Industry
  • Job title

Example: Segmenting businesses by company size can help tailor services to the specific needs of small, medium, and large enterprises. However, it’s important to remember that individuals within these companies have unique motivations and values that also need consideration.

Behavioral Segmentation

Behavioral segmentation analyzes customers based on their past behaviors such as:

  • Spending patterns
  • Browsing history
  • Interactions with the brand

Example: E-commerce sites can use browsing history to tailor product recommendations, enhancing the shopping experience. However, behavioral segmentation based on digital footprints only tells half the story and may miss deeper customer motivations.

Needs-Based Segmentation

Needs-based segmentation creates customer groups based on attitudinal factors such as:

  • Needs
  • Values
  • Motivations
  • Priorities

Example: This approach allows businesses to understand how their products or services fit into customers’ lives, helping to put customer needs at the heart of their strategy. It can also reveal opportunities for innovation by identifying unmet needs.

Summary

Market segmentation includes geographic, demographic, firmographic, and behavioral types, each offering unique insights into customer behavior and preferences. By employing these segmentation strategies, businesses can create personalized experiences, retain loyal customers, and effectively target their desired audience.

FAQs

What is market segmentation? Market segmentation is the process of dividing a broad consumer or business market into sub-groups based on shared characteristics.

Why is geographic segmentation important? Geographic segmentation helps businesses tailor strategies to local needs, making it easier to target specific areas effectively.

How does behavioral segmentation improve marketing? Behavioral segmentation allows businesses to tailor marketing efforts based on customers’ past behaviors, leading to more relevant and impactful campaigns.

Learn More

Find out more about our capabilities in market segmentation or get in touch to discuss a new project with us. We’d be happy to share our expertise.

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