The Best Practices of Market Segmentation - Logicsofts

The Best Practices of Market Segmentation

9th January 2023

Marketers face a growing number of challenges today. From enormous competition to the need to maneuver new forms of marketing, everything provides its own set of problems to solve. To face up to it, marketers have to do whatever they do efficiently. One extremely important method that can make or break a marketing strategy is market segmentation. Markets can be segmented according to various features, from demographics to all the traits used in psychographic segmentation. Thus, there is a lot to know about segmenting the markets in order to do it successfully and with ease.

Understanding market segmentation

Market segmentation can be defined as grouping the existing market of consumers into subcategories based on shared characteristics. The consumer base here can include both existing customers and all potential buyers.

Thus, when conducting market segmentation, marketing departments would first identify who their potential buyers are. This means firstly looking at whether they sell to only local or otherwise restricted markets or global markets as well. Then, one would need to approximate how many people or firms could conceivably become their clients.

The most important part of market segmentation is defining the key features by which to group the client base. For B2C firms, these features would, first of all, be demographic information. Age groups are the best example. Some firms would market most effectively to teenagers, while for others, the target audience is senior citizens. Other demographics, such as urban or rural residency or education, are, of course, also crucial.


They are, however, not enough for effective market segmentation. B2C firms would supplement demographic data with psychographics that define the character traits of their intended customers. More precisely, this includes hobbies, likes, dislikes, psychological tendencies as revealed by their buying habits, and so on.

B2B firms would use the equivalent of demographics for companies – firmographic data. This data also includes such characteristics as age, location of headquarters, number of other locations, etc. Psychographic data can also be used in B2B market segmentation when we know who the decision-makers in the firms are.

Equipped with all these and other types of data, marketers are able to segment existing and potential customers. They can create various groups based on any characteristic or a number of characteristics that they find the most important. The importance of the various features is defined based on the kind of product that the firm is selling and the potential value of the particular types of customers.

Best practices

The aforementioned basic process of conducting market segmentation has many variations. Depending on the particular resources and needs, one can customize the process in many different ways. Let us go over some best practices in market segmentation that should be considered when thinking about your own way of doing it.

Firstly, think of the data. On the one hand, you are going to need large volumes of data to be able to conduct thorough market research and segmentation. And the data should not only be large in volume but varied as well. Consider using as many alternative data types as you can get your hands on. This will enable you to segment the market in varied ways and stay dynamic.

This brings us to the second point. Be careful about the data sources you use. You will need a lot of them to produce the intended result of dynamic market segmentation. But quality should not be forgotten. Choose the sources that you can trust. Also, look into the third-party data providers that have a good reputation for data quality.

Considering the volume of the data you will have to deal with, you are better off using state-of-the-art technology. As long as you can afford the initial investment, novel AI-tools and software programs will greatly increase your efficiency and almost certainly turn out cost-effective in the end.

Another thing to remember is that market segmentation is never completely done. Be sure to periodically reconsider the way you have defined the segments and their value for you. For this purpose, you would need to constantly track your performance and review your options.

You might even consider segmenting the market in a few different ways and then analyzing the pros and cons of each. Of course, in the end, any real understanding will come from testing your market segmentation model in the field and seeing how it helps your marketing efforts.

Finally, make sure to look at what your competitors are doing. From the data on their activities, you can recognize which audiences they are targeting. This type of competitive intelligence will allow you to either compete more effectively or concentrate on different segments.


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Author : Abhay

Abhay is a Digital Marketing Guru and an accomplished entrepreneur with an experience of a decade working with various businesses varying from startups to established brands. He co-founded many companies like Logicsofts, PrintYo, CrazyRise and more. He is passionate about SEO and Online Data Analytics, which plays a vital role in any business to grow and mutate as per the data results.
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