Segmenting your market is incredibly important if you want to achieve success in any industry. It has many benefits, from improved marketing to making it easier to expand your offerings. FMCG (fast-moving consumer goods) are no exception. In fact, there are many reasons why market segmentation for FMCG products is sometimes even more important in this industry than others. There are many steps you can take to ensure your segmentation efforts are as effective as possible for your FMCG business.

First, it’s important to understand why segmentation is so important, and what makes FMCG different from some other industries. Then, we’ll move onto some key best practices for FMCG market segmentation.

Why is market segmentation important?

Whatever industry you’re in, it’s almost always helpful to segment your market into different slices based on a range of factors like needs, values, behaviors or interests. This has a wide range of benefits, such as:

  • It helps you better target your audience. Instead of developing products for a broad range of people, you can hone in on a specific segment and create a product that addresses their pain points more effectively.
  • It allows you to market more accurately and reliably. As above, when your target audience for marketing is more precisely defined, you can create marketing materials that speak to your prospects more directly, helping you build more meaningful relationships, engage them more easily, and increase your sales.
  • It reduces risk and optimizes spending. When you (correctly) target a more specific group of people, you increase the chances of successfully converting them to customers. This allows you to use marketing budgets more wisely, focusing resources on people you know are in need of your product instead of taking a costly scattergun approach.

(Learn more about market segmentation in our ultimate guide to market segmentation)

Why is market segmentation important for FMCG products?

FMCG products can be defined as products that are sold quickly and at a relatively low cost. This bracket of goods includes things like snacks, toiletries, cosmetics, and over-the-counter drugs. 

This category has certain characteristics that make segmentation a critical initiative for any FMCG business and will influence the approach you take to your segmentation.

  • With FMCG goods, people’s needs and desires change — sometimes significantly — based on where they are and who they’re with. For example, someone eating out with friends might have very different preferences compared to when they’re eating at home after a long day of work. This means one person may fit into several segments depending on their environment. This kind of fluctuation doesn’t happen in the same way as many other product types, like cars or investment products. As such, an occasion-based segmentation is needed.
  • FMCG is a high-competition space. Just think of the enormous numbers of potato chip brands, or toilet paper options. All these brands are fighting for customers all the time, and to compete in this kind of environment you need a keen understanding of your market and how to target it.
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Market segmentation for FMCG products — guiding principles on how to get it right

For FMCG businesses, market segmentation should use many of the best practices employed by other types of companies. Here are some ways to ensure you get the most out of market segmentation as an FMCG company.

Get the right people on board at the beginning

One of the biggest challenges when you’re running a segmentation in an FMCG organization is getting buy-in to the process from the key stakeholders. A segmentation should drive decisions at every level of a business – from marketing to product development – so it’s important to get these people on board at the outset to optimize eventual adoption of the segments.

One way of doing this is to carry out stakeholder interviews with the key people in your organization. This is important for several reasons:

  • It allows you to gather important knowledge that exists in the business to inform the segmentation itself 
  • It helps create buy-in. By having skin in the game at the beginning, you are able to excite people about the project and create evangelists who will be more likely to harness the research going forwards. 

Another useful tip is to consider a client side “champion” both for the duration of the research and the internal roll out. This should be combined with a client side “core team” with representatives from each of the departments that is planning on using the segmentation. 

Remember that a person’s needs can change based on their environment, which will have implications for the way you approach segmentation in this category.

As mentioned above, one of the unique attributes of the FMCG category is that consumers’ needs change based on the situation. This means that with FMCG products, people don’t necessarily fit into fixed, static segments. As such, a lot of the time, segmentation is done based on occasions.

If we think about the alc-bev category, people tend to consume very different drinks depending on the occasion. Somebody having a beer with dinner on a Wednesday night will be motivated by a very different need than he/she will be when hanging out at a nightclub on Saturday, where they might be drinking something entirely different. Putting this person in one segment would wash out the findings, rather than accentuating the two very different motivations present in these occasions.

For this reason, when doing market research to inform a segmentation, it’s important to be specific about the what and why of the choices people make at different times. Ask them about a range of different scenarios to ensure their diverse needs are represented.

This is important to keep in mind for FMCG products since our habits and tastes fluctuate so much, in a way that they don’t always do with other products.

Identify the segments with most potential for your business

The core element of a segmentation project is the development of the segmentation solution, dividing the market up into segments that you can target. In this stage of the research, it’s important to remember that even though one of your segments might be a relatively small percentage of the market, it could account for a large share of sales. This is a vital principle to bear in mind in any category, but for FMCG it’s incredibly important, given how competitive the market can be. Focusing on a niche segment, by targeting consumers’ needs closely, can be a recipe for success. 

Augment traditional segmentation techniques with (self) ethnographic research

Every segmentation involves quantitative research to group people into segments based on certain characteristics. This allows us to target groups with broadly similar attributes with the same types of product.

We always recommend combining this with qualitative research to get under the skin of your segments and to help you create detailed personas. This qualitative research can take many forms – from in-depth interviews to online research such as an online community.

For FMCG brands, we recommend considering ethnography at this stage. This gives you a unique and unmatched opportunity to really understand your segments— if you really want to get to know your Fitness Enthusiasts, for instance, you want to see them in the course of their daily life. What do they do after work? What does their house look like? What’s in their refrigerator?

Ethnography gives you a level of insight that you can’t quite access with surveys. Doing this in person is incredibly rich, but it can be logistically challenging (particularly during Covid) and costly so it isn’t always possible to take advantage of this method. That said, there are a range of self-ethnographic techniques you can use to gain this depth of insight through mobile research. Examples include asking people to create a food diary, complete videos or photo tasks in store to help you understand the purchase journey or interview friends or family members. 

The insights from self-ethnography can be incredibly rich, helping you to really deepen your understanding of your segments so you can develop products, services and campaigns that really meet their needs. 

Bring your segments to life 

Once you’ve created your segments, the next task is to bring them to life. There are a number of ways you can do this but the first step is to create personas. 

What is a persona? A persona is a fictional profile that encapsulates the core qualities of each segment, including their needs, behaviors and motivations. The purpose of a persona is to help others in the business understand each segment and how they differ from one another so they can better serve their needs. As such, they tend to be very visual so they can be easily remembered and placed at the forefront of decision making. 

Naming here is of vital importance. A memorable name can be really useful in helping stakeholders remember the defining characteristics of a segment so that they live on in the organization.

Some personas can be as simple as a PowerPoint slide. But at Kadence, we like to take this further, developing a range of visual outputs that you can use to help everyone in the business understand your core targets – from the C suite to the factory floor. 

We’ve developed everything from interactive PDFs to infographics to bring different segments to life. Some techniques we’ve found particularly useful include: 

  • Video-based teaser campaigns prior to unveiling the different personas to build interest and engagement 
  • Posters to bring personas front and center for employees in the office
  • Documentary-style films with consumers representing each segment. These can be a really effective way of bringing the segmentation to life and helping the key insights stick with stakeholders for a long time to come

(You can find out more about our design team and their capabilities).

Video interview in a person's home

Going global – how to approach international segmentations 

Most FMCG brands are global, but their products can and do vary depending on where they are sold. As such, marketers often ask us if they should have one global segmentation solution or individual solutions by region or country. 

The answer really lies in how you will use it.  If you have marketing teams that are deployed at a country level, then country level is the way to go, with, hopefully, a global framework that the countries all fall into that the global marketing team can use. 

If most of the marketing action is coming from a single global team, then one global segmentation is better so it really does depend on the set up of your organization and team. 

Need help developing a market segmentation for FMCG products in your business?  

Market segmentation in the FMCG space is a powerful way to dig into your market, better understand your customers, create better products, and get buy-in from leadership for your plans.

It’s crucial to do this right. There are many challenges and potential pitfalls to navigate, but a huge potential upside in an industry where competition is fierce and customer expectations are high.

For best results, it helps to work with the experts. To find out how Kadence can help with market segmentation for FMCG, read more about our segmentation capabilities, our work in FMCG or get in touch with us today.

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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.