Market Segmentation Criteria – How to segment markets

To maximize the effectiveness of your segmentation, you must clearly segment markets using the right market segmentation criteria. Learn how to segment markets appropriately!

Market segments must be measurable, accessible, substantial and actionable in order to deserve your attention. To meet these requirements for profitable segments, you need to select relevant market segmentation criteria. In other words, how to segment markets? On basis of what criteria will you target your customers?

For this, you have to group consumers based on market segmentation criteria that are relevant for your company. These criteria can be based on geographic, demographic, psychographic and behavioural variables. Bear in mind that not all market segmentation criteria are relevant and useful for every company. For example, car manufacturers would gain little by distinguishing between vegetarians and non-vegetarians. However, for a meat-producing firm, this may be one of the most important market segmentation criteria.

Market Segmentation Criteria

Geographic Market Segmentation

The first group of market segmentation criteria is based on geographic variables. Geographic market segmentation divides the market into geographical units, which can be nations, states, regions, cities or even neighbourhoods.

Demographic Market Segmentation

Demographic market segmentation is all about people. It divides the market into segments based market segmentation criteria that tell us something about the population: age, gender, family size etc. Worthy of note is the fact that demographic market segmentation variables are the most popular bases for consumer market segmentation. The reason is that consumer needs and wants are often interrelated with demographic variables. Also, demographic variables are rather easy to measure in contrast to many others.

Psychographic Market Segmentation

Market segmentation criteria of psychographic nature allow to divide the market into segments based on variables such as social class, lifestyle and personality.

Behavioural Market Segmentation

Behavioural market segmentation divides a market into segments on basis of consumer knowledge, attitudes, uses or responses to a specific product.

Multiple Criteria Market Segmentation

In order to segment markets appropriately, you must combine the most relevant segmentation criteria for your company and product. The combination of market segmentation criteria should lead to market segments that are measurable, accessible, substantial and actionable. The result should be precise, better-defined target groups.

Below, you can find all the criteria including examples.

Market Segmentation Criteria – How to segment Markets