In business, one cannot target all groups because it will cause confusion when providing products. For this reason, market segmentation is required from the beginning.
Market segmentation itself is the categorization of potential customers based on their gender, age, place of residence, occupation, culture, and more. Each customer’s characteristics distinguish their needs for a product. In a heterogeneous society, market segmentation separates people into homogeneous groups, making marketing easier.
Also read: What is Market Segmentation? Types and How to Determine It
So, what are the types of market segmentation? Read the following for more information:
1. Demographic Segmentation
The most commonly used market segmentation is demographic segmentation. This segmentation divides the market into groups based on demographic variables such as age, gender, income, occupation, religion, race, and social class. For instance, an ion drink product targets potential consumers aged 15-35, both men and women, at an affordable price to reach students and workers. Another example is a clothing product targeting women who wear hijabs aged 21-40 years, with an income of over IDR 5 million per month, and belonging to the middle class.
2. Geographic Segmentation
Types of Market Segmentation
The second type is geographic segmentation, which divides the target market based on their location, from countries to provinces, cities or regencies, and specific complexes. Geographic segmentation also considers climate and other coverage areas. Businesses applying geographic segmentation often adapt their products to local tastes. For example, gaming smartphones are marketed in countries where the majority of the population comes from the upper middle class and resides in major cities.
3. Psychographic Segmentation
Psychographic segmentation divides the target market based on lifestyle (luxury lifestyle, weekend parties, simple lifestyle, buying/cooking their own food), personality (introvert/extrovert), interests (hobbies, habits during free time), opinions, attitudes, beliefs (political understanding and perspectives), and values (good and bad). Starbucks is an example of a company using psychographic segmentation by targeting trend-following individuals.
Also read: What is FnB Business and Its Opportunities in Indonesia
4. Sociocultural Segmentation
This segmentation is based on the social and cultural conditions of a group. Sociocultural segmentation includes variables like social class, family life cycle, culture and subculture, cross-culture, and global marketing.
5. Behavioral Segmentation
Types of Market Segmentation
Behavioral segmentation categorizes markets based on consumer behavior toward a type of business. Variables include attitudes, reactions, habits, and product usage by consumers. These variables are linked to consumer decision-making. Businesses can develop marketing strategies to build brand loyalty based on behavioral segmentation. For instance, morning porridge sellers cater to workers who don’t have time to cook breakfast.
Also read: What is SMEs: The Meaning of Small and Medium Enterprises
6. Benefit Segmentation
Benefit segmentation groups potential customers based on the benefits or advantages sought from a product. Products sought after typically provide the most benefits to potential customers. Benefits sought can vary in aspects like function, value for money, social benefits, and emotional satisfaction. Brands must understand the benefits their target market seeks to target them correctly. An example of benefit segmentation is a cosmetic product released in compact packaging for easy portability.
7. Time Segmentation
Lastly, time segmentation groups consumers based on seasonal shopping times. An easy example is during the fasting month of Ramadan when seasonal vendors sell dates, cookies, and clothes for Eid.
These are the various types of market segmentation and their examples. Before starting a business, market segmentation should be determined in advance to clarify product development direction, define marketing strategies, and facilitate setting the selling price.
