{"id":238044,"date":"2024-09-10T22:18:25","date_gmt":"2024-09-10T22:18:25","guid":{"rendered":"https:\/\/userpilot.com\/blog\/why-is-market-segmentation-important\/"},"modified":"2024-11-26T09:41:31","modified_gmt":"2024-11-26T09:41:31","slug":"why-is-market-segmentation-important","status":"publish","type":"post","link":"https:\/\/userpilot.com\/blog\/why-is-market-segmentation-important\/","title":{"rendered":"Why is Market Segmentation Important? [+ Methods]"},"content":{"rendered":"<p><a href=\"https:\/\/www.epsilon.com\/us\/about-us\/pressroom\/new-epsilon-research-indicates-80-of-consumers-are-more-likely-to-make-a-purchase-when-brands-offer-personalized-experiences\" target=\"_blank\" rel=\"nofollow noopener\">Research from Epsilon<\/a> shows that 80% of customers are more likely to do business with a company that offers personalized marketing campaigns. This statistic highlights why <a href=\"https:\/\/userpilot.com\/blog\/market-segmentation\/\">market segmentation<\/a> is important: it allows tailored <a href=\"https:\/\/userpilot.com\/role\/product-marketing\" target=\"_blank\" rel=\"noopener noreferrer\">product marketing<\/a> customized to the needs of distinct market segments.<\/p>\n<p>Otherwise, without an effective market segmentation strategy, aim too broadly, and you won&#8217;t successfully attract your target audience. Aim too narrowly, and you&#8217;ll barely attract anyone.<\/p>\n<p>This article will help you find that market segmentation sweet spot while explaining the various segmentation types and methods to consider as well.<\/p>\n<h2 id=\"2o4o8\">TL;DR<\/h2>\n<ul>\n<li>Each customer is unique, and market segmentation lets you cater to these customer differences. But segmentation offers many more benefits as well, such as:<\/li>\n<\/ul>\n<ol type=\"1\">\n<li><strong>Better-informed product development<\/strong>: This lets you focus on high-value <a href=\"https:\/\/userpilot.com\/blog\/customer-requests\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer requests<\/a> to ensure new features address real needs and <a href=\"https:\/\/userpilot.com\/blog\/adding-value-to-products\/\" target=\"_blank\" rel=\"noopener noreferrer\">add value<\/a>.<\/li>\n<li><strong>Maximize marketing strategy effectiveness<\/strong>: You can tailor campaigns to specific market segments, thereby <a href=\"https:\/\/userpilot.com\/blog\/user-engagement-strategy\/\" target=\"_blank\" rel=\"noopener noreferrer\">driving greater engagement<\/a> and return on investment.<\/li>\n<li><strong>Uncovers valuable insights<\/strong>: <a href=\"https:\/\/userpilot.com\/blog\/analyze-customer-behavior\/\" target=\"_blank\" rel=\"noopener noreferrer\">Analyzing customer behavior<\/a> across segments unlocks insights you can use to <a href=\"https:\/\/userpilot.com\/blog\/product-strategy-example\/\" target=\"_blank\" rel=\"noopener noreferrer\">refine product strategies<\/a> and improve brand loyalty.<\/li>\n<\/ol>\n<ul>\n<li>There are four commonly used forms of market segmentation, each targeting different customer attributes:<\/li>\n<\/ul>\n<ol type=\"1\">\n<li><strong>Demographic segmentation<\/strong>: Focuses on characteristics like company size, industry, location, and revenue.<\/li>\n<li><strong><a href=\"https:\/\/userpilot.com\/blog\/behavioral-segmentation-examples\/\" target=\"_blank\" rel=\"noopener noreferrer\">Behavioral segmentation<\/a><\/strong>: Centers on how customers use products, including <a href=\"https:\/\/userpilot.com\/blog\/behavioral-data-types\/\" target=\"_blank\" rel=\"noopener noreferrer\">behavioral data<\/a> like usage rate and buying behavior.<\/li>\n<li><strong>Geographic segmentation<\/strong>: <a href=\"https:\/\/userpilot.com\/blog\/customer-segmentation-analysis\/\" target=\"_blank\" rel=\"noopener noreferrer\">Customer segmentation<\/a> is based on location factors such as region, urban vs. rural settings, and climate.<\/li>\n<li><strong><a href=\"https:\/\/userpilot.com\/blog\/psychographic-segmentation\/\">Psychographic segmentation<\/a><\/strong>: <a href=\"https:\/\/userpilot.com\/blog\/customer-segmentation-strategy\/\" target=\"_blank\" rel=\"noopener noreferrer\">Segments customers<\/a> by lifestyle, values, personality traits, and interests.<\/li>\n<\/ol>\n<ul>\n<li>Apart from popular segmentation types, you can also explore these lesser-used alternative methods:<\/li>\n<\/ul>\n<ol type=\"1\">\n<li><strong>Value segmentation<\/strong>: Categorizes customers based on their potential revenue and worth.<\/li>\n<li><strong>Firmographic segmentation<\/strong>: Suited for B2B contexts, it classifies businesses by characteristics like size, industry, and location.<\/li>\n<li><strong>Generational segmentation<\/strong>: Groups customers by generational cohorts, such as Millennials or Gen Z.<\/li>\n<li><strong>Lifestage segmentation<\/strong>: <a href=\"https:\/\/userpilot.com\/blog\/customer-segmentation-strategy\/\" target=\"_blank\" rel=\"noopener noreferrer\">Segments customers<\/a> based on significant life stages or milestones.<\/li>\n<li><strong>Seasonal segmentation<\/strong>: Targets customers based on purchasing behavior tied to seasons and holidays.<\/li>\n<\/ol>\n<ul>\n<li>Ready to customize your marketing strategies based on each customer segment&#8217;s needs and preferences? <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Schedule a Userpilot demo<\/a> to see how you can get started.<\/li>\n<\/ul>\n<div class=\"container-banner-userpilot\" style=\"border: 1px solid #dadada; border-radius: 5px;\">\n<div class=\"wrapper-banner-userpilot\">\n<div>\n<p><img decoding=\"async\" class=\"fav-icon-banner-userpilot\" src=\"https:\/\/userpilot-website-assets.s3.us-west-2.amazonaws.com\/wp-content\/uploads\/2023\/11\/06101950\/usp-fav-dark.png\" \/><\/p>\n<h3>Try Userpilot and Take Your Product Marketing to the Next Level<\/h3>\n<div class=\"banner-userpilot-button-icon\">\n<p><a class=\"banner-userpilot-button\" href=\"https:\/\/userpilot.com\/userpilot-demo\" target=\"_blank\" rel=\"noopener\">Get a Demo<\/a><\/p>\n<ul>\n<li>14 Day Trial<\/li>\n<li>No Credit Card Required<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div class=\"image-banner-userpilot\"><img decoding=\"async\" src=\"https:\/\/blog-static.userpilot.com\/blog\/wp-content\/uploads\/2024\/01\/userpilot-features-preview.png\" alt=\"\" \/><\/div>\n<\/div>\n<\/div>\n<h2 id=\"cr1q8\">Benefits of market segmentation<\/h2>\n<p>All customers are not alike, so there can&#8217;t be a one-size-fits-all marketing strategy that works for all your customer segments. Instead, you need to tailor your marketing efforts for each market segment to better meet their needs.<\/p>\n<p>Doing so not only <a href=\"https:\/\/userpilot.com\/blog\/customer-happiness\/\" target=\"_blank\" rel=\"noopener noreferrer\">keeps customers happy<\/a> but also helps you unlock several benefits, too. Let&#8217;s go over what these are.<\/p>\n<h3 id=\"6f3ov\">Inform your product development efforts<\/h3>\n<p>Market segmentation helps better guide <a href=\"https:\/\/userpilot.com\/blog\/product-development-process\/\" target=\"_blank\" rel=\"noopener noreferrer\">product development efforts<\/a> to address specific customer needs. It removes the guesswork of developing features you think customers need and helps you avoid adding unnecessary features.<\/p>\n<p>Instead, you can examine feature requests from each segment and see what common feature your high-value customers request. To simplify analyzing the answer distributions, you can use <a href=\"https:\/\/userpilot.com\/blog\/data-visualization-ux-best-practices\/\" target=\"_blank\" rel=\"noopener noreferrer\">data visualizations<\/a> like pie or bar charts.<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/survey-analytics_b52e9a608c7e2f009573b8fdcc3d093e_800.png 1x, https:\/\/images.storychief.com\/account_6827\/survey-analytics_b52e9a608c7e2f009573b8fdcc3d093e_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/survey-analytics_b52e9a608c7e2f009573b8fdcc3d093e_800.png 1x, https:\/\/images.storychief.com\/account_6827\/survey-analytics_b52e9a608c7e2f009573b8fdcc3d093e_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/survey-analytics_b52e9a608c7e2f009573b8fdcc3d093e_800.png\" alt=\"Market segmentation informs product dev\" \/><\/picture><figcaption>Analyze answer distributions with charts in <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<p>By <a href=\"https:\/\/userpilot.com\/blog\/feature-prioritization-matrix\/\" target=\"_blank\" rel=\"noopener noreferrer\">prioritizing feature development<\/a> based on those requests, you focus on addressing your customers&#8217; <a href=\"https:\/\/userpilot.com\/blog\/jobs-to-be-done-template\/\" target=\"_blank\" rel=\"noopener noreferrer\">jobs-to-be-done (JTBD)<\/a>, providing them with greater value.<\/p>\n<p>You can sign up for our talk, &#8220;<a href=\"https:\/\/summit.productdrive.io\/talks\/you-dont-have-a-prioritization-problem-you-have-a-strategy-problem\/\" target=\"_blank\" rel=\"nofollow noopener\">You Don\u2019t Have a Prioritization Problem, You Have a Strategy Problem<\/a>,&#8221; in the upcoming Product Drive to learn more about the role product strategy plays in prioritization.<\/p>\n<h3 id=\"e3e7j\">Improve the impact of your marketing strategies<\/h3>\n<p>Instead of sending a generic message to your entire target market, segmentation enables you to develop targeted marketing campaigns for each segment. So, you can create personalized campaigns that target customers&#8217; specific needs, resulting in greater engagement<\/a> and return on investment.<\/p>\n<p>Market segmentation also helps you utilize data-driven insights to craft personalized marketing messages that resonate deeply with each target audience. For instance, you could customize the <a href=\"https:\/\/userpilot.com\/blog\/in-app-training-saas\/\" target=\"_blank\" rel=\"noopener noreferrer\">in-app training<\/a> for new features based on different <a href=\"https:\/\/userpilot.com\/blog\/customer-analytics-use-cases\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer use cases<\/a> and <a href=\"https:\/\/userpilot.com\/blog\/jobs-to-be-done-survey\/\" target=\"_blank\" rel=\"noopener noreferrer\">jobs-to-be-done<\/a> (JTBD).<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/flow-setting_347d30352111f6a29eb4cfc82bd1a38b_800.png 1x, https:\/\/images.storychief.com\/account_6827\/flow-setting_347d30352111f6a29eb4cfc82bd1a38b_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/flow-setting_347d30352111f6a29eb4cfc82bd1a38b_800.png 1x, https:\/\/images.storychief.com\/account_6827\/flow-setting_347d30352111f6a29eb4cfc82bd1a38b_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/flow-setting_347d30352111f6a29eb4cfc82bd1a38b_800.png\" alt=\"Create flows for market segmentation\" \/><\/picture><figcaption>Segment flows for various users with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h3 id=\"44qqt\">Gain insights into your target market<\/h3>\n<p>Market segmentation helps <a href=\"https:\/\/userpilot.com\/blog\/customer-insights\/\" target=\"_blank\" rel=\"noopener noreferrer\">unlock greater customer insights<\/a>. For example, segment users<\/a> based on their subscription plans and compare <a href=\"https:\/\/userpilot.com\/blog\/feature-adoption\/\" target=\"_blank\" rel=\"noopener noreferrer\">feature adoption rates<\/a> across different groups.<\/p>\n<p>Once you identify which segment has higher adoption, you can dive into their usage patterns to understand what drives their engagement. Considering analyzing user activity patterns, customer stickiness, navigation paths, etc.<\/p>\n<p>By learning from the experiences of your most engaged segments, you can <a href=\"https:\/\/userpilot.com\/blog\/product-strategy-framework\/\" target=\"_blank\" rel=\"noopener noreferrer\">refine your product strategies<\/a> to boost overall adoption and <a href=\"https:\/\/userpilot.com\/blog\/improve-customer-satisfaction\/\" target=\"_blank\" rel=\"noopener noreferrer\">improve customer satisfaction<\/a> across market segments.<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/usage-trend_b3ffba1172039527e2f4d21754fbb01f_800.png 1x, https:\/\/images.storychief.com\/account_6827\/usage-trend_b3ffba1172039527e2f4d21754fbb01f_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/usage-trend_b3ffba1172039527e2f4d21754fbb01f_800.png 1x, https:\/\/images.storychief.com\/account_6827\/usage-trend_b3ffba1172039527e2f4d21754fbb01f_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/usage-trend_b3ffba1172039527e2f4d21754fbb01f_800.png\" alt=\"Usage patterns for market segmentation\" \/><\/picture><figcaption>Track segment usage trends with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h2 id=\"cc3mi\">Common types of market segmentation<\/h2>\n<p>To effectively target your customer segments, focus on these four main types of marketing segmentation: demographic, geographic, psychographic, and behavioral. Let&#8217;s explore these in greater detail so you can pick the appropriate one to implement.<\/p>\n<h3 id=\"7ph57\">Demographic segmentation<\/h3>\n<p>Demographic segmentation divides your target audience into segments based on statistical characteristics used to describe individuals.<\/p>\n<p>Apart from the obvious data points like age and gender, the criteria for demographic segmentation includes characteristics like:<\/p>\n<ul>\n<li><strong>Income<\/strong>: <a href=\"https:\/\/userpilot.com\/blog\/segment-customers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Segments customers<\/a> according to their income level, from low-income to high-income brackets.<\/li>\n<li><strong>Education level<\/strong>: Categorizes customers based on their highest level of education attained, such as high school, college, or advanced degrees.<\/li>\n<li><strong>Occupation<\/strong>: Classifies customers by their job type or industry, such as professionals, skilled workers, or executives.<\/li>\n<\/ul>\n<p>If you&#8217;re wondering how demographic segmentation works in the B2B context, that&#8217;s what firmographic segmentation is for. It&#8217;s basically like demographic targeting, except for businesses, as we discuss later.<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/demographic-segmentation_09b0dc7ffaa9218bf1bdbf398323cfc7_800.png 1x, https:\/\/images.storychief.com\/account_6827\/demographic-segmentation_09b0dc7ffaa9218bf1bdbf398323cfc7_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/demographic-segmentation_09b0dc7ffaa9218bf1bdbf398323cfc7_800.png 1x, https:\/\/images.storychief.com\/account_6827\/demographic-segmentation_09b0dc7ffaa9218bf1bdbf398323cfc7_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/demographic-segmentation_09b0dc7ffaa9218bf1bdbf398323cfc7_800.png\" alt=\"Type of market segmentation: Demographic\" \/><\/picture><figcaption>Demographic user segmentation with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h3 id=\"2mdlc\">Behavioral segmentation<\/h3>\n<p><a href=\"https:\/\/userpilot.com\/blog\/what-is-behavioral-segmentation\/\">Behavioral segmentation<\/a> divides the market based on <a href=\"https:\/\/userpilot.com\/blog\/customer-interactions-guide\/\" target=\"_blank\" rel=\"noopener noreferrer\">how customers interact<\/a> with your products and services. As such, it focuses on studying <a href=\"https:\/\/userpilot.com\/blog\/product-usage-analytics-saas\/\" target=\"_blank\" rel=\"noopener noreferrer\">product usage patterns<\/a> and purchasing behaviors to tailor solutions more effectively.<\/p>\n<p>Here&#8217;s a list of segmentation criteria appropriate for SaaS companies:<\/p>\n<ul>\n<li><strong><a href=\"https:\/\/userpilot.com\/blog\/feature-usage-rate\/\" target=\"_blank\" rel=\"noopener noreferrer\">Usage rate<\/a><\/strong>: Categorizes customers by how frequently they use your product, such as disengaged, engaged, or <a href=\"https:\/\/userpilot.com\/blog\/power-users\/\" target=\"_blank\" rel=\"noopener noreferrer\">power users<\/a>.<\/li>\n<li><strong>Buying behavior<\/strong>: Segments based on how and why customers make purchasing decisions.<\/li>\n<li><strong><a href=\"https:\/\/userpilot.com\/blog\/customer-loyalty\/\" target=\"_blank\" rel=\"noopener noreferrer\">Customer loyalty<\/a><\/strong>: Identifies customers who consistently use or prefer a particular solution.<\/li>\n<li><strong>Occasion<\/strong>: Considers special events or needs that drive product usage, such as seasonal or project-based requirements.<\/li>\n<\/ul>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/behavioral-segmentation_25dd733f4d325b844084b587b007cac9_800.png 1x, https:\/\/images.storychief.com\/account_6827\/behavioral-segmentation_25dd733f4d325b844084b587b007cac9_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/behavioral-segmentation_25dd733f4d325b844084b587b007cac9_800.png 1x, https:\/\/images.storychief.com\/account_6827\/behavioral-segmentation_25dd733f4d325b844084b587b007cac9_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/behavioral-segmentation_25dd733f4d325b844084b587b007cac9_800.png\" alt=\"Behavioral market segmentation\" \/><\/picture><figcaption>Segment users by behavioral data with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h3 id=\"d5hlk\">Geographic segmentation<\/h3>\n<p>Geographic segmentation divides the entire market based on location. This includes physical location and climate since both can <a href=\"https:\/\/userpilot.com\/blog\/customer-behavior-analysis-example\/\" target=\"_blank\" rel=\"noopener noreferrer\">influence customer behavior<\/a> and preferences. As such, it allows companies to <a href=\"https:\/\/userpilot.com\/blog\/saas-product-marketing-strategy\/\" target=\"_blank\" rel=\"noopener noreferrer\">tailor marketing strategies<\/a> to regional needs and conditions.<\/p>\n<p>Here&#8217;s the list of segmentation criteria for geographic market segmentation:<\/p>\n<ul>\n<li><strong>Region<\/strong>: Segments by regions or states to adapt solutions to local requirements.<\/li>\n<li><strong>Country<\/strong>: Differentiates based on national needs and regulatory environments.<\/li>\n<li><strong>Urban vs. rural<\/strong>: Considers urban or rural settings to address specific challenges and opportunities.<\/li>\n<li><strong>Climate<\/strong>: Takes into account climatic conditions that may affect product use or <a href=\"https:\/\/userpilot.com\/blog\/satisfy-customer-needs\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer needs<\/a>.<\/li>\n<\/ul>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/geographic-segmentation_8450fc1c47626326a92ef9c6008b879c_800.png 1x, https:\/\/images.storychief.com\/account_6827\/geographic-segmentation_8450fc1c47626326a92ef9c6008b879c_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/geographic-segmentation_8450fc1c47626326a92ef9c6008b879c_800.png 1x, https:\/\/images.storychief.com\/account_6827\/geographic-segmentation_8450fc1c47626326a92ef9c6008b879c_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/geographic-segmentation_8450fc1c47626326a92ef9c6008b879c_800.png\" alt=\"Geographic segmentation characteristics\" \/><\/picture><figcaption>Create geographic segments with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h3 id=\"3s8gh\">Psychographic segmentation<\/h3>\n<p>Lastly, there&#8217;s <a href=\"https:\/\/userpilot.com\/blog\/psychographic-vs-behavioral-segmentation\/\" target=\"_blank\" rel=\"noopener noreferrer\">psychographic segmentation<\/a> that segments the market based on lifestyle, values, and personality traits. Psychographic segmentation helps ensure that products resonate with the deeper motivations of customers, leading to more <a href=\"https:\/\/userpilot.com\/blog\/boost-customer-engagement\/\" target=\"_blank\" rel=\"noopener noreferrer\">meaningful engagement<\/a>.<\/p>\n<p>The criteria for psychographic segmentation include characteristics like:<\/p>\n<ul>\n<li><strong>Lifestyle<\/strong>: Categorizes businesses based on their operational style and practices, such as innovative or traditional approaches.<\/li>\n<li><strong>Values and beliefs<\/strong>: Segments according to the core values or mission of a business, such as sustainability or growth.<\/li>\n<li><strong>Personality traits<\/strong>: Identifies customers with specific characteristics, such as risk-takers or cautious planners, to tailor solutions accordingly.<\/li>\n<li><strong>Interests<\/strong>: Considers the focus areas or interests of a business, such as <a href=\"https:\/\/userpilot.com\/blog\/technology-adoption-curve\/\" target=\"_blank\" rel=\"noopener noreferrer\">technology adoption<\/a> or market expansion.<\/li>\n<\/ul>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/psychographic-segmentation_0456fcf9e7830b23953125934aecb7f7_800.png 1x, https:\/\/images.storychief.com\/account_6827\/psychographic-segmentation_0456fcf9e7830b23953125934aecb7f7_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/psychographic-segmentation_0456fcf9e7830b23953125934aecb7f7_800.png 1x, https:\/\/images.storychief.com\/account_6827\/psychographic-segmentation_0456fcf9e7830b23953125934aecb7f7_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/psychographic-segmentation_0456fcf9e7830b23953125934aecb7f7_800.png\" alt=\"Psychographic market segmentation\" \/><\/picture><figcaption>Divide users based on psychographics with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h2 id=\"e0ap6\">Other less common types of market segmentation<\/h2>\n<p>Apart from traditional market segmentation forms, you can also leverage less common methods. Exploring these methods provides a more nuanced <a href=\"https:\/\/userpilot.com\/blog\/customer-wants-and-needs-analysis\/\" target=\"_blank\" rel=\"noopener noreferrer\">analysis of customer needs<\/a> that you can utilize to better tailor offerings and messaging.<\/p>\n<h3 id=\"4ehcd\">Value segmentation<\/h3>\n<p>Value segmentation <a href=\"https:\/\/userpilot.com\/blog\/customer-segmentation-tools\/\" target=\"_blank\" rel=\"noopener noreferrer\">categorizes customers into segments<\/a> based on their &#8220;transactional worth&#8221;. In other words, you gauge how much possible revenue a customer might generate and use that as the basis of segmentation.<\/p>\n<p>Companies often use this segmentation to create a high-value market segment of customers typically subscribed to the highest pricing plan.<\/p>\n<p>The criteria for this <a href=\"https:\/\/userpilot.com\/blog\/customer-segmentation-analysis\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer segmentation<\/a> include:<\/p>\n<ul>\n<li><strong>Price sensitivity<\/strong>: Segments customers based on their reaction to price changes, from highly price-sensitive to those focused on other factors.<\/li>\n<li><strong>Service expectations<\/strong>: Classifies customers based on their expectations of service levels, such as basic versus premium or dedicated support.<\/li>\n<li><strong>Usage frequency<\/strong>: Differentiates customers on how often they use your product or service, distinguishing between disengaged and <a href=\"https:\/\/userpilot.com\/blog\/engaged-user\/\" target=\"_blank\" rel=\"noopener noreferrer\">engaged users<\/a>.<\/li>\n<\/ul>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/value-segmentation_963a649d4840dc97bc9025075e2726a3_800.png 1x, https:\/\/images.storychief.com\/account_6827\/value-segmentation_963a649d4840dc97bc9025075e2726a3_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/value-segmentation_963a649d4840dc97bc9025075e2726a3_800.png 1x, https:\/\/images.storychief.com\/account_6827\/value-segmentation_963a649d4840dc97bc9025075e2726a3_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/value-segmentation_963a649d4840dc97bc9025075e2726a3_800.png\" alt=\"Value segmentation details\" \/><\/picture><figcaption>Create value-based segments with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h3 id=\"6fpa0\">Firmographic segmentation<\/h3>\n<p>Firmographic segmentation classifies companies based on characteristics instead of individual users. This segmentation is essentially like demographic segmenting but specifically for B2B contexts.<\/p>\n<p>Let&#8217;s go over the criteria for this segmentation type, and it&#8217;ll make more sense:<\/p>\n<ul>\n<li><strong>Company size<\/strong>: Differentiates businesses by employee count or revenue, identifying different needs and purchasing power across small, medium, and large enterprises.<\/li>\n<li><strong>Industry<\/strong>: Groups companies by the sector they operate in, allowing for targeted campaigns that cater to industry-specific needs.<\/li>\n<li><strong>Business model<\/strong>: Classifies based on the type of business operations, such as B2B, B2C, or hybrid, to tailor offerings and messaging accordingly.<\/li>\n<\/ul>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/firmographic-segmentation_16074c9e87ddb575b65a5d8743233941_800.png 1x, https:\/\/images.storychief.com\/account_6827\/firmographic-segmentation_16074c9e87ddb575b65a5d8743233941_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/firmographic-segmentation_16074c9e87ddb575b65a5d8743233941_800.png 1x, https:\/\/images.storychief.com\/account_6827\/firmographic-segmentation_16074c9e87ddb575b65a5d8743233941_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/firmographic-segmentation_16074c9e87ddb575b65a5d8743233941_800.png\" alt=\"Market segmentation type: Firmographic\" \/><\/picture><figcaption>Firmographic market segmentation with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h3 id=\"2c3o9\">Generational segmentation<\/h3>\n<p>Generational <a href=\"https:\/\/userpilot.com\/blog\/types-of-user-segmentation\/\" target=\"_blank\" rel=\"noopener noreferrer\">user segmentation<\/a> groups together customers based on generational cohorts, like Baby Boomers, Generation X, Millennials, and Gen Z. Since each generation exhibits distinct behaviors, such segmentation helps <a href=\"https:\/\/userpilot.com\/blog\/customer-insight-tools\/\" target=\"_blank\" rel=\"noopener noreferrer\">uncover deeper customer insights<\/a>.<\/p>\n<p>Some common criteria for such marketing segmentation include:<\/p>\n<ul>\n<li><strong>Age range<\/strong>: Segments customers into groups based on their birth years.<\/li>\n<li><strong>Technological adoption<\/strong>: Classifies customers by their comfort and <a href=\"https:\/\/userpilot.com\/blog\/customer-engagement-technology\/\" target=\"_blank\" rel=\"noopener noreferrer\">engagement with technology<\/a>, distinguishing between tech-savvy and less tech-oriented generations.<\/li>\n<li><strong>Communication preferences<\/strong>: Groups customers by their preferred communication channels, such as in-app, social media, email, or traditional media.<\/li>\n<\/ul>\n<h3 id=\"4h36m\">Lifestage segmentation<\/h3>\n<p>Lifestage segmentation divides customers based on their life stage, which is always accompanied by some milestone or major life event.<\/p>\n<p>Applying this approach to the SaaS context, customers can be segmented based on where they are in the <a href=\"https:\/\/userpilot.com\/blog\/customer-lifecycle-segmentation-saas\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer lifecycle<\/a>. This segmentation type recognizes that <a href=\"https:\/\/userpilot.com\/blog\/customer-wants-and-needs-analysis\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer needs and wants<\/a> continuously evolve over time.<\/p>\n<p>Here are the typical criteria for this customer segmentation:<\/p>\n<ul>\n<li><strong>Parental status<\/strong>: <a href=\"https:\/\/userpilot.com\/blog\/customer-segmentation-models\/\" target=\"_blank\" rel=\"noopener noreferrer\">Segments customers into groups<\/a> based on whether they have children, which directly affects their purchasing needs.<\/li>\n<li><strong>Career stage<\/strong>: Categorizes customers by their career stage, such as early-career, mid-career, or nearing retirement.<\/li>\n<li><strong>Lifestyle changes<\/strong>: Groups customers based on significant life events, such as buying a home, starting a family, or retirement.<\/li>\n<\/ul>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/lifestage-segmentation_ca22eb8403c69e9f6ff9f4424f1ce1dc_800.png 1x, https:\/\/images.storychief.com\/account_6827\/lifestage-segmentation_ca22eb8403c69e9f6ff9f4424f1ce1dc_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/lifestage-segmentation_ca22eb8403c69e9f6ff9f4424f1ce1dc_800.png 1x, https:\/\/images.storychief.com\/account_6827\/lifestage-segmentation_ca22eb8403c69e9f6ff9f4424f1ce1dc_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/lifestage-segmentation_ca22eb8403c69e9f6ff9f4424f1ce1dc_800.png\" alt=\"Lifestage segmentation\" \/><\/picture><figcaption>Divide users by life stages with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h3 id=\"b662b\">Seasonal segmentation<\/h3>\n<p>Seasonal segmentation classifies customers based on their purchasing habits during certain periods. This typically includes the four seasons, popular events like the Super Bowl, and holidays like Christmas or Valentine&#8217;s.<\/p>\n<p>Let&#8217;s go over the criteria for seasonal segmentation:<\/p>\n<ul>\n<li><strong>Seasonal &amp; cultural events<\/strong>: Categorizes customers by their engagement with cultural or seasonal festivities that impact their purchasing behavior.<\/li>\n<li><strong>Weather patterns<\/strong>: Differentiates <a href=\"https:\/\/userpilot.com\/blog\/customer-needs-assessment\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer needs<\/a> according to changes in weather, such as demand for winter clothing or summer accessories.<\/li>\n<li><strong>Retail cycles<\/strong>: Groups customers based on shopping patterns tied to specific retail cycles, such as back-to-school or holiday shopping.<\/li>\n<\/ul>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/seasonal-segmentation_3ddfd17bf6536affaf4a954ee3c287c8_800.png 1x, https:\/\/images.storychief.com\/account_6827\/seasonal-segmentation_3ddfd17bf6536affaf4a954ee3c287c8_1600.png 2x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/seasonal-segmentation_3ddfd17bf6536affaf4a954ee3c287c8_800.png 1x, https:\/\/images.storychief.com\/account_6827\/seasonal-segmentation_3ddfd17bf6536affaf4a954ee3c287c8_1600.png 2x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/seasonal-segmentation_3ddfd17bf6536affaf4a954ee3c287c8_800.png\" alt=\"Seasonal market segmentation\" \/><\/picture><figcaption>Seasonal segmentation with <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\" target=\"_blank\" rel=\"noopener noreferrer\">Userpilot<\/a>.<\/figcaption><\/figure>\n<h2 id=\"9j38s\">Conclusion<\/h2>\n<p>While there are technically different types of segmentation\u2014like demographic or firmographic\u2014these are not hard-and-fast rules. What matters most is defining who you want to target.<\/p>\n<p>With modern tools that offer rich segmentation properties, you can take a more granular approach and target precisely, ensuring better results with minimal wasted effort.<\/p>\n<p>Looking to refine your market segmentation strategy with deeper customer insights? <a href=\"https:\/\/userpilot.com\/userpilot-demo\" target=\"_blank\" rel=\"noopener noreferrer\">Get a Userpilot Demo <\/a>and see how we can help you create more personalized campaigns.<\/p>\n<div class=\"container-banner-userpilot\" style=\"border: 1px solid #dadada; border-radius: 5px;\">\n<div class=\"wrapper-banner-userpilot\">\n<div><img decoding=\"async\" class=\"fav-icon-banner-userpilot\" src=\"https:\/\/userpilot-website-assets.s3.us-west-2.amazonaws.com\/wp-content\/uploads\/2023\/11\/06101950\/usp-fav-dark.png\" \/><\/p>\n<h3>Try Userpilot and Take Your Product Marketing to the Next Level<\/h3>\n<div class=\"banner-userpilot-button-icon\"><a class=\"banner-userpilot-button\" href=\"https:\/\/userpilot.com\/userpilot-demo\" target=\"_blank\" rel=\"noopener\">Get a Demo<\/a><\/p>\n<ul>\n<li>14 Day Trial<\/li>\n<li>No Credit Card Required<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div class=\"image-banner-userpilot\"><img decoding=\"async\" src=\"https:\/\/blog-static.userpilot.com\/blog\/wp-content\/uploads\/2024\/01\/userpilot-features-preview.png\" alt=\"\" \/><\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Research from Epsilon shows that 80% of customers are more likely to do business with a company that offers personalized marketing campaigns. This statistic highlights why market segmentation is important: it allows tailored product marketing customized to the needs of distinct market segments. This article will help you find that market segmentation sweet spot while explaining the various segmentation types and methods to consider as well.<\/p>\n","protected":false},"author":55,"featured_media":238046,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[293],"tags":[336,5028,847,143,6116,6687,514],"class_list":["post-238044","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-product-marketing","tag-customer-segmentation","tag-customer-segments","tag-marketing-strategy","tag-product-marketing","tag-segmentation-survey","tag-segmentation-tools","tag-user-segmentation"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Why is Market Segmentation Important? [+ Methods]<\/title>\n<meta name=\"description\" content=\"Discover reasons why market segmentation is important while exploring methods for creating user segments for tailoring marketing strategies.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/userpilot.com\/blog\/why-is-market-segmentation-important\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why is Market Segmentation Important? 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