Segmentation allows brands to identify and target potentially lucrative consumer subgroups. This can influence marketing strategy, NPD and corporate positioning. In recent years, segmentation has evolved and brands can now analyse a large range of datasets to identify and target groups of consumers. Proponents of segmentation contend that this approach improves customer retention, acquisition and market performance. However, conversely, some industry commentators believe that a focus on targeting highly segmented audiences means that light buyers within mass audiences are overlooked.

Definition

Segmentation divides existing and potential customers into subgroups, helping marketers to target bespoke audiences based on specific characteristics and needs. There are different types of segmentation but the most common form of consumer market segmentation include demographic, socio-economic, geodemographic, behavioural, psychographic, lifestage, lifestyle and B2B.