5 Types of Market Segmentation to Consider for Your Brand

How to Understand Your Customers, with 14 Specific Examples

Market segmentation helps brands understand customer groups and reach them more effectively. There are many types of market segmentation, and the field can easily become overwhelming. But Insight to Action specializes in helping brands bring clarity to segmentation. In this article, we detail 14 real-life examples to explain these five common types of market segmentation.

1. Demographic Market Segmentation
2. Behavioral Market Segmentation
3. Psychographic Market Segmentation
4. Geographic Market Segmentation
5. Firmographic Market Segmentation

Types of Market Segmentation: Demographic

Demographic is the most straightforward type of market segmentation. It concerns facts and figures that you can measure about your target customers, such as:

• Age
• Sex
• Education
• Income
• Family structure
• Job Title

For many brands, demographic targeting is the first step to segmenting customers. It’s relatively easy to reach this type of market segmentation through advertising, including TV, print and digital. But demographics don’t provide much insight into a customer’s deeper reasons to buy. A brand team may know there’s demand from the demographic segment but not know how to motivate those customers through product design, distribution or messaging.

3 Examples of Demographic Types of Market Segmentation

1. Back-to-School: With 69% of parents planning to buy technology for their back-to-school students, Lenovo has an easy demographic market segment: parents of college students. Learn more about this topic in “Brand Strategy Examples: Back to School 2024.”
2. Clothing Brand: Ann Taylor uses demographic segmentation to reach its very particular customer, older professional women. Younger professional women are encouraged to shop at LOFT (formerly Ann Taylor LOFT). This was made clear to me years ago when I was shopping at an Ann Taylor retail location, and it was suggested to me that I should visit the younger brand. Perhaps consumer confusion is why the company re-branded LOFT without the “Ann Taylor.”
3. Bathtub Brands: Kohler lives up to its brand promise “The Bold Look of Kohler” by offering bathtubs that appeal to younger homeowners, with minimalist, sleek designs. SafeStep’s walk-in tubs are designed for accessibility for older adults, and its marketing content features older models enjoying the product.

Types of Market Segmentation: Behavioral

Once a brand has a track record with customers, it can benefit from behavioral market segmentation. Using aggregate history of purchases and interactions with the brand, segments can be built based on:

• Frequency of purchases
• Seasonality
• Upgrade pathways
• Customer trust
• Customer use cases
• Referral intent

This type of market segmentation requires systems to track and understand customer behavior, like a CRM database. Brands can also conduct qualitative and quantitative research to build segments. Once the customer segments are well understood, products and communications can be designed that appeal to those customers.

2 Examples of Behavioral Types of Market Segmentation

1. Food-Focused Traveler: Insight to Action founder Michal Clements details four behavioral segments of foodie travelers and how to reach them in “Market Segmentation Examples: Food-Focused Travelers.”
2. Adults Who Buy Toys: 43% of adults buy toys for themselves, but a simple demographic targeting won’t find them. Which half of the adult population embraces their inner child, and which find the behavior odd? I wrote about this opportunity in “Market Segmentation Examples: In Toys, Adults Overtake Preschoolers as Top Target.”

Types of Market Segmentation: Psychographic

Psychographic market segmentation is based on a customer’s personality and interests. Brands can use this targeting to reach a broader audience similar to its existing customers (or find new groups of customers entirely). Instead of internal data, this type of market segmentation uses outside data on traits such as:

• Personality type
• Attitudes and priorities
• Values and opinions
• Activities
• Lifestyle factors
• Life stage factors

With the rise of social media, psychographic market segmentation became accessible to brands with any size marketing budget. Whether a user’s favorite platform is Facebook, LinkedIn, YouTube or TikTok, they’re constantly providing psychographic data about themselves. And all platforms aggregate that data for use by advertisers. Today, anyone can reach pet lovers who are looking for a career change or sports enthusiasts who have recently moved.

2 Examples of Psychographic Types of Market Segmentation

1. 55+ Senior Living: Demographic segmentation isn’t enough, as seen in the personal stories Insight to Action shared in “Senior Living Market Segmentation Examples.” Psychographic factors are important for reaching the right potential resident for each kind of community.  
2. Holidays: Segmenting for those who celebrate various holidays requires a careful understanding of why and how customers celebrate. We’ve explored Valentine’s Day, Halloween and Mother’s Day vs. Father’s Day.

Types of Market Segmentation: Geographic

Classic types of market segmentation by geography were historically used by large brands to address national or regional differences. For instance, BMW drivers in the UK need cars enabled to drive in the left lane, while US cars drive on the right. Nestle KitKat candy bars are highly localized, with wasabi-flavored in Japan or hazelnut-flavored in Canada.

This kind of geographic segmentation is meant to meet the needs of different cultures, including:

• Language, both official and colloquial
• Tastes
• Preferences
• Holidays and observances
• Laws and standards

International brands will fail if they seem out-of-touch with a given culture. Anyone of a certain age remembers when Chevy released the Nova in Mexico. No one paused to point out that “nova” means “no go” in Spanish. How embarrassing!

With today’s dominance of web marketing, brands of all sizes need to be aware of geographic segmentation. Otherwise, a bistro in Atlanta, Georgia may inadvertently waste advertising dollars in the country of Georgia. Retailers, restaurants and local services with multiple locations need to both direct customers to the right location and communicate they understand the needs of each region.

Depending on the size of the market and the brand’s budget, geographic segmentation is often combined with demographic, behavioral or psychographic types of market segmentation for hyper-specific positioning.

4 Examples of Geographic Types of Market Segmentation

1. Big Brand: While branding remains standard and familiar around the world, McDonald’s localizes its menu offerings for different countries and cultures, like the McAloo Tikki burger in India.
2. Regional Brand: Most regional grocery store brands are relegated to an endcap or special “local” section of Whole Foods. Not so with Queen City Sausage. Its appeal to regional taste earns its products prime spots in major retailers like Walmart, Sam’s Club and Kroger. Along with bratwurst and smoked sausage, it offers the unique breakfast meat goetta, a German sausage made from beef, pork and steel-cut oats.
3. Local Brand: Garden center Natorp’s brands itself as “Cincinnati’s Place for Plants,” with a focus on high-quality plants that thrive in the greater Cincinnati region. Marketing communication and staff guide customers on when to plant in the spring, what to plant in the fall, how to manage local soil types and which plants are native. It’s a much different experience than shopping with a big box retailer like Home Depot.
4. Combined Targeting: As my Insight to Action colleague wrote about in “Growth Strategy Example: Glossier Black Cherry,” cosmetics brand Glossier segments both behaviorally and geographically when it promotes its highly-successful product launch events. Not just any Minnesotan consumer will stand in line for hours to receive a free lip balm charm.

Types of Market Segmentation: Firmographic

While other types of market segmentation focus on individual consumers, firmographic segmentation categorizes organizations. It’s used in B2B marketing to determine what kinds of companies (or firms) are suitable targets.

Firmographic segmentation could include:

• Number of employees
• Revenue
• Industry
• Geography
• Stage of growth

Like geographic segmentation, firmographic may also be combined with demographic, behavioral or psychographic types of market segmentation. For instance, a brand may be seeking buyers with particular characteristics at certain types of companies.

3 Examples of Firmographic Types of Market Segmentation

1. Corporate Training Brand: For a company that offers training to start-ups, firmographic segmentation is important. They’re looking for companies in the start-up stage of growth, with 20 or fewer employees. Further segmentation could be by revenue. Start-ups that are pre-revenue often have investor funds slated for training.
2. Medical Device Sales Brand: If a company sells patient scales, it’s firmographic segmentation would include large hospitals, regional hospitals, and distributors who sell to doctors’ offices. All of these segments buy in different ways.
3. Combined Targeting: A sales consulting firm may segment their offerings by psychographic and firmographic measures. The base segment is: “Sales executives with underperforming sales teams” for companies with 30+ salespeople. Further segmentation is by industry: technology, distribution, or manufacturing.

Insight to Action helps companies sort through the types of market segmentation to find their ideal customer targets. Our Market Segmentation Resources show our broad range of expertise in different industries, from large to small. Get to know our team at one of our Open Hours Office Events. And Contact Us to start finding your best customers.