Many say that segmenting a market is dividing it. Others claim that segmenting is choosing a group of consumers with similar needs. This is, to say the least, inaccurate. It is not possible to “divide” a market, much less “choose” consumers.

But what does segmenting a market mean?

More precisely, it can be said that segmenting a market consists of identifying a specific group of individuals within a heterogeneous market with similar perceptions, responses, and preferences regarding products or services. Once segmentation is established, individuals within the same segment are expected to behave more similarly to each other than to individuals within another segment. Segmentation is; therefore, a powerful technique that helps marketing formulate and present value propositions that meet the desires of each of these target audiences, each of these segments identified through segmentation. This should be the foundation that supports the entire marketing strategy for a product or service.

Marketing professionals must find the best way to segment the market and visualize its configuration. The methods of segmentation will depend on the type of product or service being marketed and the market’s expectations and demands. There are numerous ways to segment a given market, especially if the company considers combining several approaches. These are called segmentation bases.

Examples of segmentation bases include: income segmentation, age group segmentation, geographic segmentation, demographic segmentation, psychographic segmentation, social class segmentation (which strongly influences people’s preferences), segmentation by the type of goods people consume (which express their lifestyle), segmentation by “brand personality” (corresponds to people’s personalities), behavioral segmentation, segmentation by product usage occasions, segmentation by expected benefits, segmentation by user status, segmentation by brand loyalty status, segmentation by product loyalty pattern, segmentation by attitude, and countless others.

Market segmentation facilitates a company’s performance in developing and marketing its products and/or services, as well as in developing and implementing marketing strategies.

Market segmentation can also be seen as a crucial step in identifying new opportunities and niches.

Marketing strategies are courses of action designed to help a company achieve its marketing objectives. A good marketing strategy presupposes market knowledge and appropriate segmentation that allows for the integration of objectives, policies, and sequences of action into a coherent whole. The goal of a marketing strategy is to ensure that the company achieves results in terms of acquiring and, most importantly, retaining customers.

The biggest challenge for those who want to segment their market is gathering or ensuring reliable customer information. Inaccurate information can lead to misleading results.

With a reliable customer database recorded in a data matrix (similar to an Excel spreadsheet), a statistical tool like SAS or SPSS (cluster analysis) solves the problem and provides the identified segments as well as the individuals within each segment.

From there, the best strategy for each segment can be developed.