Market segmentation is the process of dividing a market into distinct groups of customers with similar needs, characteristics, and buying behaviours. By dividing the market based on these criteria, organisations can better understand and meet the needs of their target customers.

Market segmentation generally involves dividing a market into four main categories: demographic, geographic, psychographic, and behavioural. Demographic segmentation involves dividing the market based on age, gender, family size, income, occupation, education, and other variables. Geographic segmentation divides the market by regions and is often used by organisations that serve a local or global market. Psychographic segmentation divides customers by their lifestyle and personality traits, such as values, attitudes, beliefs, and opinions. Behavioural segmentation divides the market based on customer loyalty, usage, and benefits sought.

By identifying and analysing various market segments, an organisation can better focus its resources on marketing to, developing products for, and delivering services to that segment. Additionally, market segmentation helps businesses identify which segments are most likely to be interested in their products or services. They can then use tailored messaging or offers to reach those specific segments.

Overall, market segmentation is a critical aspect of any successful marketing strategy. With effective market segmentation, organisations can create more efficient and cost-effective campaigns and tailor the customer experience. By understanding a customer segment’s needs, wants, and behaviours, a business can create more meaningful relationships with those customers, promoting customer loyalty and potential for increased purchase frequency.