Market segments — what they are, how they work, and how to use them

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Businesses are constantly evaluating and refining their marketing efforts to determine how well they are reaching and connecting with their target audience. If you’re trying to improve your marketing by targeting new markets or honing in on existing ones, defining your different market segments is a key step in the process.

Read on to gain a better understanding of market segments, how they work, and how you can apply this knowledge to your business. In this post, you’ll learn:

What is a market segment?

A market segment refers to a group of consumers who share similar needs or characteristics and who are likely to respond to a marketing message in a similar way. Market segmentation is the process of dividing a larger market into smaller groups or segments based on certain criteria such as demographic, psychographic, behavioral, or geographic factors.

By identifying and targeting specific market segments, companies can tailor their marketing efforts to meet the unique needs and preferences of each group — and improve their chances of success.

How market segments work

Once a company has identified the relevant market segments, they can tailor their marketing strategies to better appeal to the specific needs and preferences of each group. For example, a company might develop different products or services, pricing strategies, promotions, and advertising messages for each segment.

By targeting specific market segments, companies can create better marketing campaigns that resonate with consumers, build stronger brand loyalty, and increase sales and profitability.

Each market segment is unique because they respond in a predictable manner to your marketing strategy. There are three characteristics that apply to every market segment:

Overall, the goal of market segmentation is to identify the most valuable and profitable segments of the market and develop a marketing mix that meets their specific needs and preferences.

How market segments are used

Market segments are used by companies to better understand their customers and develop more effective marketing strategies. These segments may help in product development, ad targeting, pricing strategies, and customer retention.

How to identify market segments

There are several steps to identifying market segments. Here are some common approaches:

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  1. Conduct market research. Start by gathering data on your target audience, including demographics, psychographics, behavior, and purchasing habits. This can be done through surveys, interviews, focus groups, and other research methods.
  2. Analyze the data. Once you have collected data, you can use statistical analysis to identify patterns and trends. This can help you to identify common characteristics or shared behaviors among groups of consumers.
  3. Develop buyer personas. Use the data to create detailed profiles of your ideal customers — including their goals, challenges, preferences, and motivations. This will help you to better understand your target audience and tailor your marketing efforts accordingly.
  4. Segment your market. Once you have developed buyer personas, you can use them to segment your market into distinct groups — based on demographics, psychographics, behavior, and other factors.
  5. Test and refine. Once you’ve identified your market segments, test your marketing strategies with each group to see how they respond. This will help you to refine your approach and develop more effective marketing campaigns over time.

Use tools to define your market segments

When you’re ready to get started with market segmentation, first evaluate your marketing strategy to see if it could benefit from defining your market segments. Then evaluate whether your current marketing tools can create and manage those segments effectively.

Learn about Adobe Target

Adobe Target is a personalization solution that delivers the right experiences to every single customer at scale. Built for marketers, Target makes it easy to perform testing, measurement, and optimization, all without writing code. With the power of unified customer profiles and machine learning from Adobe Sensei, Target personalizes experiences based on historical behavior , rather than the latest transaction. Use Adobe Target to provide more personalized experiences to customers in all your market segments to give the best experience through every channel.

Watch an Adobe Target overview video to learn more.