Market Segmentation: 101

Market Segmentation 101 

Payton Perez 

You invented a really cool widget based on solving a common problem people have. Super! We love an entrepreneurial queen or king. You run through the development steps, including budgeting, financing, sourcing, production, and inventory management. Now it’s time to sell your widget.  

You know there is a market for the widget because you have done your research and discovered there is nothing like it on the market. You scoured social media pages, retailers, and online forums to find that people need it. You even learned there is even complementary product potential out there. That is your target market.  

When it comes to marketing, though, we need to narrow our focus. While “spray and pray” can work on occasion, it’s best to curate marketing efforts to those we specifically want to reach. How do we figure out who those people are?  

Welcome to market segmentation.  

What is market segmentation? 

Generally, we view market segmentation as having four categories: 

Understanding who your customer is, why they buy, and what they care about will pay dividends in your business venture. Let’s break down what these segments mean.  

Geographics – Is the problem you are solving specific to a place? Maybe it’s an issue in your town. Alternatively, it could be a global problem, so you’ll need to navigate international waters when it comes to marketing your widget. Are there language barriers? Cultural barries? We have all heard the old wives’ tale that Chevy couldn’t sell a Nova in Mexico because “no va” means it doesn’t go in Spanish? This stuff matters! 

Demographics – This should come as a no-brainer, but if your product is intended for women, you should make sure your marketing plan is targeting women specifically. The same goes for any group of people who are grouped by age, education, occupation, etc.

Demographics largely define the people themselves so make sure you are curating content to include those attributes. If your widget is a toy for children, your marketing should appeal to children in that it should convey fun, excitement, and color while resisting complex concepts and language. If you are selling something directed towards retirees, appealing to their needs and desires specifically will gain you a larger market share.  

Psychographics – This encompasses the less tangible, harder-to-define attributes people have. These attributes can change frequently as people learn and grow but are also what make target audiences unique. A direct example of how psychographics can impact a buyer’s decision-making could be religious text.

Generally, people of a specific faith will be more inclined to buy a specific religious text (I.e., Copy of a bible or Quran) than those who do not believe. A smaller group of people interested in learning more about these religions may be inclined to purchase them as well. People who are not religious or are not interested in learning about these religions would have no interest in purchasing these. While this is a more black-and-white example, it demonstrates how values and attitudes can impact buying position.  

Behavioral – This is the ”why?” behind the purchase. The motivation for buyers following through with a purchase experience is the key to unlocking success. You started doing it when you identified a problem that needed to be solved and created your widget to solve it. You learned through research that buyer behavior suggested this was a need or want for a certain group of consumers. From there, you take a step further.

You identify where consumers are in the buying cycle. Are they ready to purchase or are they still in a research phase? Is this something they would be satisfied with by only purchasing one time, or is it something they will need to purchase frequently? If more than once, how often and why? Digging deeper into this buyer behavior will lend itself to tipping the scale from shopper to buyer.  


You have identified the attributes that make up your target segment and are ready to start creating content and ads.  

Ah! Not so fast. There is still work to be done. Specifically, it’s time to position your brand in a way that consumers will feel good about purchasing from you. You must prove a unique benefit to the consumer and create a brand burr hole in their mind. The way we acknowledge that certain brands immediately come to mind when we think of a specific product is what we want to do for your widget.  

There are two ways to position your brand: Point of Difference (POD) and Point of Parity (POP),  

Mixpanel has a phenomenal blog called The Signal that focuses on product analytics, and they say that “POP tells your target market your product or service meets their basic needs. POD tells consumers why your product or service is the best option over competitors that also have the essentials covered.”  

Think of this as the minimum needed to maintain competitiveness in your market (POP) and the differentiator that pushes consumers in your direction instead of the comp set (POD).  

So, what’s your POD? What makes you different from anything out there you could consider a competitor? Is it that you have managed to produce it at a lower cost, and you can pass those savings on to the customer? Maybe it’s a wider variety of colors, or an added feature nobody else has. The important part is identifying what this is and highlighting it as valuable to the consumer.  

Wrap it up 

We have accomplished a lot in this blog post. We have defined your targeted segment using the four common categories and thoughtfully considered how these will influence your marketing plan. We have also learned the importance of identifying what sets you apart from the competition and what your product offers that others don’t. 

Now it’s time to continue your research to further develop your brand and marketing plan using this information. Research the hot buttons of your market segment. Learn more about their buyer behaviors and purchase motivators. Decide how you are going to connect their attributes to your content. Finally, consider how your competitors market their products and identify if there are commonalities or differences in how you want customers to perceive you. From there, you are sure to develop and execute a thoughtfully curated marketing plan that will drive results.  

2 responses to “Market Segmentation: 101”

  1. Great point on the importance of positioning! I think Southwest does a terrific job of this!! Though a “budget airline,” they have become the preferred airline for the no-fuss-no-muss flyer, (business flyers are a different breed/market haha). And despite all of their cancellations/bag losses, their transparency on their issues are being accepted by their consumers. Good read!

Leave a Reply

%d bloggers like this: