Multiple experiences and characteristics come together to determine how consumers make purchasing decisions and interact with your product or service. To understand how these factors influence consumer choices, you often need to carry out market segmentation. 

Market segmentation helps you to identify shared characteristics that define different customer segments. In this article, we will explain how market segmentation works, and show you how to collect data for market segmentation using Formplus. 

What is Market Segmentation? 

Market segmentation means splitting your customers into smaller, defined categories based on specific variables and characteristics. In other words, it is the process of dividing your customer base into segments as determined by numerous factors ranging from demographic variables to psychographic information. 

As a business, you most likely have a vague idea of who your product is meant for. Unfortunately, working with this vague idea means that you would invest a lot of time and resources in generic processes that may not yield the best results for you. 

Market segmentation helps you to define your target audience within specific contexts, and this gives you a better idea of your customers’ interests and preferences. Although this process can be demanding, it helps you to optimize your resources in the long run and create more personalized content for your users. 


Types of Market Segmentation

Behavioral Segmentation

This is a type of market segmentation that places customers in categories based on behavioral patterns. Here, organizations study consumer behaviors as they interact with a specific product or service and then, place consumers who exhibit similar characteristics in the same group. 

Behavioral segmentation helps you to understand how your product appeals to your target market and fits into the lifestyle of your consumers. With this, you can focus on creating targeted messages that complement the behavioral patterns of different customer categories. 

To effectively divide your target market into smaller groups, you need to consider multiple behavioral segmentation variables including purchasing behavior, benefits sought, the buyer’s journey, and customer engagement. For instance, consumers exhibit different behavioral characteristics as they move from one stage to the other in the buyer journey.

You can collect data for behavioral segmentation by conducting an online survey with Formplus. Also, website cookies, third-party data assets, and the purchase data stored in customer relationship management software can provide insights into consumer behavior.  

Examples of Behavioral Segmentation in Marketing

  1. Choosing one product over the other because of the product functionality and features. 
  2. Choosing one product over another due to customer loyalty.
  3. Choosing one product over another due to the customer’s pain points. 

Tips for Behavioral Segmentation

  1. Get familiar with your target market.
  2. Create multiple buyer personas in line with the different uses and features of your product.
  3. Understand the buyer journey.

Customer Segmentation

Customer segmentation is the act of dividing your customer base into defined groups based on specific criteria. It is an important step that helps you to identify different consumer needs and preferences in your target market, and also satisfy them accordingly. 


This type of market segmentation is useful for B2B and B2C marketing. In B2B marketing, you can place customers in defined segments based on industry, location, and in B2C marketing, you can place customers in segments based on age, gender, and lifestyle. 

Customer segmentation results in multiple benefits for businesses such as helping you decide on the best communication channel for your business. It also helps you to tailor your product to create value for different customer segments, improve customer experience, and boost customer satisfaction. 

You can gather data for customer segmentation using different methods and tools including face-to-face interviews, surveys, observation methods, and focus groups. These tools and methods allow you to gather specific information about your target audience and create customer segments that reflect different market peculiarities. 

Tips for Customer Segmentation

  1. Outline the goals and objectives of customer segmentation for your business.
  2. Collect the right information from the right sources. Customer segmentation works best with data and analytics.
  3. Understand the value of each customer segment. 

Psychographic Segmentation

In psychographic segmentation, customers are placed in categories based on their psychological traits. Here, you pay attention to how a customer's psychological disposition affects his or her purchasing habits, lifestyle, and product preferences. It is widely considered as the most effective type of market segmentation. 

5 key variables drive psychological segmentation in market research and these are Personality, Lifestyle, Social Status, AIO (Activities, Interests, Opinions), and Attitudes. These variables work separately and co-dependently to help you place customers in the right psychological segments. 

Psychological segmentation allows you to know how your product fits into the habits, dreams, and aspirations of your target audience. It helps you to understand how consumers perceive your product and to identify the pain points of your target market. 

In psychological segmentation, organizations draw data from observing how consumers think and what they picture their lives to be in the short, middle, or long-term. Let's consider some examples of psychographic segmentation in marketing. 


Examples of Psychographic Segmentation in Marketing

  1. Businesses that deal with luxury items such as certain cars, clothing, and jewelry.
  2. Certain products appeal to individuals who have a specific lifestyle such as vegetarians or pescatarians.
  3. Some products appeal to individuals who belong to a particular social class. 

Demographic Segmentation

Demographic segmentation is the process of breaking your target market into defined categories based on demographic variables. In this type of market segmentation, the organization pays attention to how consumer preferences are influenced by demographic factors like age, education, religion, and income levels. 

Demographic segmentation provides specific insights into your target and helps you to understand who they are and what they want. This, in turn, makes it possible for you to create targeted ads and specialized marketing campaigns that appeal to different consumer demographics. 

As we stated earlier, numerous demographic variables influence consumer choices in the marketplace including age, gender, and income levels. Many times, these variables are interdependent and come together to determine how a consumer perceives your product or service. 

Demographic segmentation helps you to forge lasting relationships with your target audience and to also create a better customer experience for your users. In addition to this, it provides useful insights that you can leverage to improve your product and service delivery. 

Examples of Demographic Segmentation

  1. Products are gender-specific; that is, created for members of a particular gender. 
  2. Products that can only be afforded by individuals who earn a certain level of income. 
  3. Some products only provide value for people in a particular education class. 

Geographic Segmentation 

Geographic segmentation makes use of different geographic variables to place customers into different market categories. It is one of the easiest ways to discover the diversity of your target market and use this information to your advantage; especially in marketing. 

In geographic segmentation, you look beyond variables that bother on location and physical habitation, and you consider other geographic factors like cultural preferences, population type, and density. This gives you a holistic understanding of how these things nudge consumers towards certain choices. 

Common geographic segmentation variables are climate, religion/cultural practices, and population type. Geographic segmentation is important because it helps you to identify market clusters that present the most viable opportunities for you as a business owner. It also provides data for marketing and strategy campaigns. 


Examples of Geographic Segmentation

  • Products that are unique to specific climates like winter clothing and beachwear.
  • Urban-rural segmentation.
  • Cultural preferences and food inclinations

Tips for Conducting a Successful Market Segmentation 

  1. Break your target market into specific segments comprising consumers with specific characteristics. Be sure to narrow down to the primary characteristics that differentiate one segment from the other.
  2. Clearly communicate the value of your product to each market segment. Ensure that you emphasize how your product satisfies the needs of the different market categories.
  3. Clearly define your market segmentation goals and objectives.
  4. Identify the most important segmentation variables for your target market. This would help you arrive at the best results for your business.
  5. Collect valuable data from the right sources. You can administer surveys and questionnaires with Formplus forms to gather the right information.
  6. Develop a solid market segmentation strategy that identifies your target market and outlines recommendations. 
  7. Execute a go-to marketing plan that appeals to different market segments and can drive acquisitions at every level. 
  8. Keep your eyes on the data and analytics. Ensure that your decisions are data-driven. 

Top Form Templates to Collect Data for Market Segmentation 

  1. Market Survey

Use this market survey to collect useful data from your target market for market segmentation. You can add different form fields that help you to easily collect a variety of information from respondents ranging from geographic information to demographic data. 

  1. Demographic Survey

This demographic survey is easy to use and it helps you to gather relevant demographic information from respondents. With this form, you would be able to collect necessary information from your customers for demographic segmentation. You can edit this template to suit your needs in the form builder. 

  1. Product Evaluation Survey

Do you want to find out what your customers think about your new product or service? This Formplus product evaluation survey is all you need to gather the relevant information from your users and improve your product. You can use the multiple form sharing options to share your survey with numerous respondents. 

  1. Online Feedback Form

This form would help you gather feedback on different product features from your customers to improve your overall service delivery. This form is easy to use and you can modify it to suit your needs in the form builder. 

  1. Customer Satisfaction Survey

This form would help you understand what consumers think about your product and overall service delivery. With the Formplus online feedback form, you would be able to collect information about customer pain points and know how well your product meets their needs. 

  1. Brand Personality Survey

This form is an easy way to collect information for psychographic segmentation. This survey is easy to administer and can help you understand how your customers perceive your brand; that is, their thoughts and feelings about your brand. 

  1. Product Pricing Survey

Use this product pricing form to find out what your customers think about the cost of your goods and services. This form would help you arrive at the best pricing system for your goods and services. 

Importance of Market Segmentation 

Market segmentation helps you to understand your target audience and create a product that better appeals to them. Let’s consider some other reasons you should prioritize market segmentation as an organization.

  1. Market segmentation allows you to identify niches that offer better prospects for your product or service. By breaking your market into segments, you can spot and compare marketing opportunities. 
  2. It is an effective way for you to manage limited resources strategically. Market segmentation helps you utilize resources in the most profitable manner for better returns. 
  3. Market segmentation is an easy way for you to identify your competitors and understand their strengths and weaknesses. This way, you’d be better equipped to face the competition.  
  4. When you place customers in defined segments, you can implement specific marketing strategies and programs in tune with the demands of each category. 
  5. Great market segmentation results in an effective advertisement strategy. It will give you a clear idea of who your audience is and what is most likely to pique their interests. 
  6. Market segmentation plays a crucial role in product improvement and product design. 
  7. It helps you to create the right customer experience for users and achieve maximum customer satisfaction levels plus increased sales volumes. 

Disadvantages of Market Segmentation

As beneficial as market segmentation is for your business, it also has some disadvantages. Let’s look at a few of them and what they mean for your business. 

  1. Market segmentation can be time-consuming as it involves organizing a lot of information in order to arrive at the best results. In many cases, you have to develop specific strategies for each segment and this can be quite challenging.
  1. You would need to invest more in the implementation of multiple marketing strategies for different market categories. For instance, instead of running a single ad campaign for your brand, you may have to run multiple ads to cater to the needs of your customers. 
  1. Market segmentation can lead to cannibalization. This is a situation where certain segments are over-prioritized to the detriment of other market categories. To avoid this, you need to prioritize each market segment.  
  1. Although you need to narrow it down to specific market categories, this can also lead to over-segmentation. 


Without any doubt, market segmentation is an integral process that every organization must implement as it looks to meet the needs of its consumers. While there are different types of market segmentation, it is necessary for you to identify and implement the ones that are relevant to your business and product. 

In doing this, however, be sure to create a balance and avoid certain market segmentation pitfalls as we have highlighted in this article. Finally, gather and utilize the right data sets to help you achieve the most objective market segmentation results.