Various segmentation models help businesses precisely target their audience groups. We’ll cover the five most impactful types of market segmentation and provide modern examples for each one.
Demographic segmentation
Demographic segmentation is grouping customers based on objective, easily identifiable data points and attributes, making it the essential “who” segment of your market. This remains the most foundational type of segmentation because the characteristics are concrete and readily quantifiable.
Demographic segmentation helps you quickly understand the core characteristics of your audience and how to tailor marketing efforts to them strategically. It is typically sorted by characteristics like:
- Age and generation (e.g., gen Z, millennials, etc.)
- Gender
- Income
- Level of education
- Family size or status
- Religion
- Professional occupation or role in a company
Examples of demographic segmentation.
Demographic segmentation provides objective information on who is interested in your product or service and serves as an excellent starting point for advanced grouping.
Here are a couple of powerful examples of how it is used today:
- Nike’s gen Z-focused campaigns: Nike uses the age and generation-based demographic to position its brand as aspirational and aligned with social values. Campaigns like the “Why Do It” initiative are aimed directly at gen Z athletes and young adults, tailoring messaging around individual empowerment, style, and digital community.
- L’Oréal's product line segmentation: L'Oréal is a global enterprise that segments its massive market using race/ethnicity and socioeconomic status. Their Dark & Lovely line, for instance, is a specific product offering marketed directly to African American women, often in the middle to upper-middle class, addressing unique beauty needs and aspirations.
Demographic segmentation provides valuable initial information, but to understand a customer’s psychological motivations, you need to use other segmentation methods as well.
Psychographic segmentation.
Psychographic segmentation defines the “why” segment of your market. This method requires analyzing how your audience thinks, what they value, and what their core beliefs are to create a strategy targeted toward their attitudes and beliefs. This insight is crucial for crafting messaging that emotionally resonates and builds long-term brand loyalty.
Companies generally divide psychographic segments based on:
- Personality
- Hobbies and interests
- Life goals
- Lifestyle choices
- Social or political views
- Values and beliefs
Example of psychographic segmentation.
Psychographic segmentation is more difficult to execute because the data is highly subjective, requiring rich insights from preference centers, social data, and sophisticated analytics.
Here’s a clear example of how it drives strategy:
- Patagonia’s values-driven strategy: Patagonia successfully targets consumers whose values are deeply rooted in environmentalism and responsible consumption. They actively promote environmental conservation and ethical labor. This core brand purpose attracts a psychographic segment that prioritizes minimalism and sustainability, making Patagonia's mission a key differentiator in their marketing campaigns.
This segmentation is what makes customers who they are. But who they are can be heavily influenced by where they are.
Geographic segmentation.
Geographic segmentation defines the “where” segment of your market. In this method, customers are segmented based on their physical location, assuming that regional proximity leads to similar attitudes, needs, and cultural preferences.
It allows a business to customize everything from product offerings to marketing language to ensure local relevance.
Companies generally separate geographic segments by:
- Country
- State
- Climate region
- Population density
- Rural, urban, or suburban setting
Example of geographic segmentation.
Geographic segmentation works best for companies trying to blend global scale with local relevance. It often involves adapting core product offerings to fit regional tastes.
Here’s an example:
- Starbucks’ menu localization strategy: Starbucks excels at geographic segmentation by adapting its global menu to cater to local cuisine and cultural norms. For example, they offer paneer tikka sandwiches and masala chai tea lattes in India, the red bean green tea frappuccino in China, and matcha-based drinks and sakura-themed products in Japan.
Using dynamic media features in solutions like Adobe Experience Manager, images and videos can be automatically optimized and resized based on a viewer's regional internet bandwidth and device, ensuring faster load times and higher-quality viewing regardless of their geographic constraints.
The physical environment has a significant impact on why customers purchase the way they do. It’s also important to analyze how they interact and respond to your brand.
Behavioral segmentation.
Behavioral segmentation defines the “how” segment of your market. This approach examines a customer's specific actions and how they engage with your brand — their purchasing patterns, usage habits, and brand loyalty. This is the most actionable form of segmentation for optimizing customer journeys and maximizing lifetime value.
Through this type of segmentation, you can gain a deeper understanding of how specific audiences may respond to changes in pricing, new promotions, or product updates.
Audiences can be grouped by:
- Spending habits
- Browsing habits
- Interactions with your brand
- Loyalty to your brand
- Product feedback
Examples of behavioral segmentation.
Behavioral segmentation goes beyond basic characteristics to reveal a customer's true spending and interaction tendencies.
Here are a couple of examples:
- Netflix's content recommendation engine: Netflix's business model is largely dependent on behavioral segmentation based on usage rate and viewing history. The platform’s AI analyzes every interaction — including the time of day a user watches, the genres they prefer, and their pause/rewind actions — to create hyper-personalized content rows and custom thumbnails. This level of personalization is estimated to drive over 80% of all viewing activities.
- Amazon’s real-time product recommendations: Amazon uses continuous tracking of browsing and purchase history to personalize the shopping experience. For example, if a customer purchases a specific piece of sports equipment, they immediately receive tailored ads or on-site recommendations for complementary items like pads, specialized apparel, or coaching guides.
Behavioral segmentation gives businesses a close look into how customers interact with brands and spend their money, providing crucial signals for real-time engagement and predictive modeling.
Firmographic segmentation.
Firmographic segmentation is the B2B version of demographic segmentation. It is the study and classification of B2B customer organizations using information about similar company characteristics. This segmentation type is crucial for sales and marketing teams aiming to find businesses that would benefit most from their product or service.
Companies generally separate the firmographic segment based on:
- Turnover and profit numbers
- Industry type
- Business size
- Number of employees
- Locations
- Ownership (public, private, or government)
- Organizational trends (e.g., software adoption, technical maturity, etc.)
- Average sales cycle
Examples of firmographic segmentation.
Most of the market segments focus on B2C marketing, but firmographic segmentation is vital for B2B companies creating engaging, high-value campaigns.
- Asana’s industry-specific value propositions: Asana segments its market by industry type and business size. They create highly customized product messaging and service bundles, differentiating their approach between enterprise clients (who need scale and security features) and nonprofit organizations (which need cost-effective collaboration tools and focus on mission enablement). This precise targeting ensures the marketing narrative and sales pitch are immediately relevant to the organization's unique operational needs.
- AWS’s company size segmentation: Amazon Web Services (AWS) segments its offerings based on company size and revenue. They offer a simplified "free tier" and services to small and medium-sized businesses (SMBs) but market highly customized, enterprise-grade cloud infrastructure solutions to large corporations, with distinct sales and marketing motions for each segment.
For B2B marketing, the challenge is often engaging the entire buying group within the firm, not just a single lead, which requires orchestration that tracks multiple contacts within an account.
