Must-Know Criteria for Effective Market Segmentation (with Examples)

Must-Know Criteria for Effective Market Segmentation (with Examples)

Market Segmentation refers to the division of consumers into different special groups. 

It is achieved when the characteristics or attributes of potential consumers are similar or share some basic qualities in a very large consumer market. 

Without this segmentation, it’s impossible to achieve a stable market based on the wants, needs, and interests of consumers. 

Market segmentation helps in focusing, which is, knowing the consumers that could benefit from or become satisfied with the available product. It reduces time, effort, and money in creating more personalized and profitable strategies. It is a crucial marketing concept. 

Companies that do proper segmentation of their market enjoy huge benefits. It means narrowing down to every customer’s expectation, placing their product or brand in high demand. 

About 95% of customers are very likely to buy from any brand that offers a personalized experience. 

Must-Know Criteria for Effective Market Segmentation (with Examples)

Types of Segmentation

Many companies incorporate a predictive model into the segmentation study to group individuals based on specific answers to survey questions. But generally, market segmentation is divided into the following.

Demographic Segmentation

With demographic segmentation, a market is sorted based on age, education, income, race, gender, family size, nationality, and occupation. It is the simplest way you can segment your market if you’re new to this. 

It is also the most common form of market segmentation. 

Demographic segmentation is popular because the products and services we buy, the amount we are willing to spend, and how we use the products depend on demographic factors. 

While there are chances that you have some information you gathered from your existing customers, you can also collect demographics from public records and private surveys.

Firmographic Segmentation

This is similar to demographic segmentation. The difference is that it identifies organizations and not individuals, like demographic segmentation. For firmographic segmentation, you will consider how large the company is and its number of employees. It will show the difference between how to address a small business and an enterprise corporation.

This form of segmentation is perfect for businesses that provide services or products that benefit organizations. An example is a firm that offers data digitization services.

Geographical Segmentation

For this type of segmentation, you will create target groups based on geographical boundaries. This basis is because people’s needs and interests differ according to their location. Geographical segmentation could be based on their climates. So, understanding these groups and their region will help you determine where and how to advertise or sell to them.  

Population, language, climate, culture, urban, suburban, and rural factors are usually considered in geographical segmentation. 

Several tools can help you gather data for geographic segmentation. You can use survey research, mobile usage data, website data, social media profiles, sales data, and many more.

Behavioral Segmentation

Here, the market is divided by behaviors and decision-making patterns such as lifestyle, usage, purchase, and consumption. Behavioral segmentation provides a more targeted approach since you will only focus on customers more likely to buy.

Psychographic Segmentation

Psychographic segmentation considers consumer behavior and divides the market according to consumers’ personalities, traits, opinions, interests, and values. An example is a fitness market that segments its customers to people who care about exercise and healthy living.

Criteria for Effective Market Segmentation

Marketing segmentation is needed for an effective business strategy. And for marketing segmentation to be effective, some criteria must be considered. They include: 


Every market segment should be broad and large enough in terms of quick sales and profit-making. The segment must have the capacity to buy, which is its purchasing ability. When a particular segment, even if it is all segments, can make enough profit, whether large or small, it attracts a firm’s attention. 

It is a waste of resources when an unjustifiable number of consumers are reached. A brand should penetrate a market with clearly defined consumers’ profiles, including data gathered on their socio-economic status, job, gender, age, and purchasing power. This data lets the brand know whether the market is too small or adequate to make the business profitable.  

A good segment should make more sales by all means and bring more profit to drive the firm’s interest in that market segment. If all the market segments yield sufficient profit, firms will possibly be interested in all. 

Let’s assume you’re a type of retailer who sells quality goods at a high cost; your customers may be interested in your goods but might not have the ability to purchase them in terms of money.

Therefore, you should make sure that the market segment is interested in your quality product and must be able to buy from you; that is, their purchasing power must be high.


A market segment should be accessible by all means, especially in distribution, transportation, and communication. To make advertisements more profitable and reach different target markets at affordable costs, you should have the ability to reach consumers easily. 

Market products should be distributed widely through various means of transportation, either by road, air, water, or other routes. Inadequate transportation facilities could lead to a lack of interest in any of the market segments. 

Therefore, to make market segmentation effective, consumers in each segment should be approachable by all means of transportation. Also, there must be effective communication; all networks should be readily available for all the consumers to attract potential consumers into the market segments. 

These make market segmentation effective, aid the distribution of goods and services, provide a steady supply of products, and promote consumer satisfaction. For instance, you may find out that a particular segment cannot be reached by social media but by newspaper or handbills. It will help if you put it into consideration for an effective market segment. 

Advertisements can also be made on websites frequently visited by target markets by identifying and gathering data on them.


The market segment must be approached with a marketing program and ways to generate advantages from it. Any market segmentation a company focuses on must be actionable enough. 

It means that there must be sufficient personnel, finance, and capability to accept them altogether. Hence, the segment must be chosen or recognized with the reach of the company. 

The market segment must have practical value and specific marketing strategies to provide a profitable and easily quantifiable outcome. The marketing strategy that can work for your market segment should also be identified and chosen if the business can execute such a strategy.


The market segment must provide differential responses when exposed to the offers of the market. It means that market segments are created specially from each other. 

Let’s assume that your segmentation reveals that people who love buying consumer foods such as beverages and those who are interested in confectionery have the same purchasing habits. Instead of having two separate segments, you should consider merging them into a single segment. 

Your segmentation may also reveal that your target market comprises the dependent population. A marketing strategy that yields positive responses and results from both the younger dependent population (0-18) and the older dependent population (65 and above) should be created and implemented to yield an effective market segmentation.


In terms of data, you should critically observe available data to measure the quantity of the market segment. Measurements are essential to be able to calculate the total attractiveness of each segment. 

You can develop a suitable measure of each segment by adding all percentages and the total market size, price, and average product. 

When measuring the market segment, you should consider consumers’ tastes, interests, purchasing power, and what they will like to buy. The size of your market and the number of customers and consumers available should be adequately defined and measured to reduce the difficulty of creating advertisements for markets. 

Sellers must measure their customers’ possible income to make market segmentation effective in all ways. 


For a stable marketing effort, your market segments must be sturdy enough for a long time. So, before you choose the form of segmentation you want to use, make sure you check how long it can remain stable. 

An example is segmenting with lifestyle. It is subject to change at any time as it is constantly evolving. Hence, it may not be advisable to segment based on lifestyle globally. Make sure you can predict your subsets with reasonable confidence. 

Final Thoughts

We have carefully broken down market segmentation, so you have all the must-knows of segmentation. This guide will help you create a very productive and profitable marketing strategy.  

Before you get started, define your market. Spell out the everyday needs of people your product caters to, then your brand’s position in the market.

Then, segment your market using any of the segmentations mentioned above while noting the criteria. Understand your market by conducting surveys, polls, and so on. After doing that, create your customer segment and test your marketing strategy. Make sure you are flexible and focused on the money. 


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