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A Complete Guide for Business market segmentation: Types, Importance and challenges

Market segmentation

What is Business Market Segmentation?

“Market segmentation” is the process of dividing potential customers into smaller groups, or “segments,” that have similar wants and needs and should respond similarly to a marketing push. Businesses can reach customers who have different ideas about the value of a product or service by dividing the market into subgroups.

The goal of market segmentation is to divide customers into smaller groups that can be better served by making changes to products and advertising. In order to better understand and serve customers, markets can be broken down into smaller subsets based on factors like location, demographics, and even buying habits. Companies can reduce their exposure to loss by using market segmentation to determine which products have the greatest potential for success in a given market and the most efficient means of bringing those products to consumers.

Types of Business Market Segmentation

Generally, there are 5 types of market segmentation. Along with PL Global Impex, let’s see all 5 in brief.

Demographic Segmentation 

The idea behind demographic segmentation is that groups of people who share certain characteristics will also share certain preferences and motivations when it comes to making purchases. Demographics and other segmentation techniques are often used together to find the markets that are most likely to buy a product.

Psychographic Segmentation 

Psychographic segmentation is a way of putting people into groups based on things they have in common, like their values, interests, and behaviors. When coupled with demographics, psychographics reveal the driving forces behind consumer behavior. 

Geographic Segmentation

Geographic segmentation lets marketers group people by location. Marketers can use location to influence buying habits when creating their messages. Businesses often divide their target audience into subsets based on geographic factors such as country, region, state, province, town, climate zone, or zip code. Market research should also consider culture and population density.

Firmographic Segmentation

Just as B2C marketers use demographics to narrow down their list of potential customers, firmographic segmentation can help narrow down their list of potential clients. Factors such as the type of business, the number of employees, the company’s legal standing, the size of the company, and its financial health all contribute to the firmographics that describe the company’s target market. B2C markets have thousands of customers, but B2B markets have only a few large commercial companies. 

Behavioral Segmentation

What their ideal customers want, why they want it, the benefits they seek, and how they plan to go about fulfilling those wants and needs are all described in detail through the lens of behavioral market segmentation. Researching both business-to-consumer and business-to-business markets through the lens of behavioral segmentation. Companies can improve the effectiveness of their marketing by learning about their customers’ motivations for making purchases.

Benefits of Business Market Segmentation

Improved productivity with existing means

Using marketing segmentation, businesses can zero in on a specific target audience or type of customer. Instead of trying to promote products to the whole market, marketing segmentation allows for a more focused, precise approach that is often less expensive than a broad-reaching approach.

Improving brand image

Marketing segmentation forces management to consider its image with a specific group. Management must choose a message after identifying the market segment. A company’s branding and messaging are more intentional when targeting a specific audience. This may indirectly improve company-customer relations.

More brand loyalty

Marketing segmentation improves customer retention. Direct, personal marketing may connect with customers and create a sense of community. Also, market segmentation makes it easier to find the right customer for your product line and target market.

Better market differentiation

Market segmentation lets a company target its message to customers and competitors. Communicating how a company differs from competitors can also help differentiate products. Management doesn’t use a broad approach to marketing. Instead, they make a specific image that is more likely to be memorable and clear.

More precise online advertising targeting

By breaking down their target audience into distinct groups, businesses can create more effective, personalized marketing campaigns. The use of social media in targeted marketing campaigns aimed at specific demographics (such as age, location, or behavior) is one example. Like PL Global Impex is aiming its products at those who wish to have premium and high-quality products.

Limitations of Business Market Segmentation

Expensive Production

Both creating and promoting to different segments of the market are resource-intensive. Producers incur greater production costs because they must make more product variations (models, colors, sizes, etc.) to appeal to a wide range of consumer subsets. Similarly, manufacturers must stock plenty of products in a variety of colors, sizes, and designs.

Expensive Advertising 

Costly advertising is another consequence of market segmentation. A marketer must take into account the wide variety of consumer subgroups, each of which has its own unique set of wants, pursuits, routines, and inclinations. The marketer has to come up with and implement different strategies for different demographics.

Extensive Investment

Market segmentation results in substantial investment. A company must produce a variety of product lines and product items in order to meet the diverse needs and desires of various groups. For this purpose, the company must increase its expenditures on technology and other inputs that may be costly.


What are the segmentation tools?

Userpilot, amplitude, and heap are some of the segmentation tools.

What is the main idea of segmentation? 

The idea behind segmentation is to be able to analyze your audience by categorizing them into different groups.

Why does business market segmentation fail?

When people who fall into different segments still have too many differences the segmentation fails.


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