Three Types of Segmentation and How to Use Them

In determining your marketing strategy, segmentation is critical to success — it’s the foundation on which your advertising rests. When building that foundation, you have time segmentation, media segmentation, price segmentation and more, but in the interest of brevity, we’ll focus on the three most popular forms: psychographic, demographic and geographic segmentation.

1. Psychographic Segmentation

This method of segmentation addresses the consumer’s values, beliefs, perceptions, attitudes, interests and behaviors. It provides a comprehensive framework for your marketing strategy, developed through a multivariate analysis of the psychological factors behind purchasing decisions. With an informed understanding of what motivates your consumer to choose one brand over another — or shop in a particular store — you can adjust your practices to reflect these insights.

So, how do these adjustments manifest? A company can capitalize on psychographic segmentation through qualitative research techniques like focus groups, using the consumer’s language to design questionnaires for large-scale use. They would include questions relevant to a consumer’s experience and lifestyle choices, asking them the extent to which they agree or disagree with a particular statement, such as, “I feel like I spend too much money on bus tickets.”

If you intended to use psychographic segmentation for your marketing strategy, it would require a significant investment of time and money. You’d have to organize interviews, surveys and questionnaires to gather information about your consumer, which is often an extensive process. That said, few other types of segmentation offer such an accurate representation of your consumer.

2. Demographic Segmentation

More common than other forms of segmentation, demographic segmentation is popular for several reasons. It’s comparatively simple, dividing the population based on an assortment of variables like age, gender, income, nationality and occupation. Through assigning consumers to specific groups, a company can market their product or service with far greater precision, ensuring the effective allocation of their advertising budget.

Most segmentation strategies involve some form of demographic segmentation. Companies adapt their marketing to appeal to the type of person most likely to purchase their product or service, and this approach often serves them well. To provide an example, an automobile company would make far more money advertising a convertible to a consumer with the income to pay for it, broadcasting their commercial on a channel affluent individuals would probably view.

Demographic segmentation will likely factor into your marketing strategy, and how you implement it depends on the consumer you’re selling to. You should look at your current customer base and make a note of their attributes, researching their average age and income as you develop your plans. In arranging your media mix to target those who already spend on your brand, you’ll know your money is in the right place.

3. Geographic Segmentation

Companies employ geographic segmentation to focus their marketing efforts on certain locations. They account for factors like consumer preference, deciding to advertise in areas that display a positive response to their product or service. This saves them from spending money on regions that won’t yield a significant profit and allows them to concentrate their efforts elsewhere.

Geographic segmentation is a standard strategy you’ll often see restaurant chains use. They’ll market a special menu item in a part of the country they believe will show interest — or, or on a larger scale, limit their locations to a specific area. In determining potential from region to region, these restaurant chains can avoid poor investments and make informed decisions to better their brand.

To use geographic segmentation in your strategy, you’ll have to consider differences in consumer preference between the north and south, urban and rural environments, warm and cold climates and more. Using relevant databases, determine the best place for your product or service and align your advertising with the culture of your consumers. Every entrepreneur has resources at their disposal to assist them in reaching their goals.

Segmentation Is Key

There isn’t a perfectly objective message that will connect with every audience, and you have to tailor your marketing to the people you know will respond. With psychographic, demographic and geographic segmentation, you can do just that. It begins with research and understanding your consumer.

Once you know their details, you’ll profit.