9 Types of Market Segmentation: A Complete Guide

Market Segmentation Made Easy.

What is customer segmentation

Your prospects’ inboxes are bursting with advertisements, announcements, and dozens of communications from brands. But generic, catch-all messaging falls on deaf ears of buyers who want a personalized experience.

Market segmentation — identifying unique groups within your target audience — helps you deliver more valuable and relevant messaging, empowering you to boost sales and customer retention.

In this guide, you’ll discover the nine types of market segmentation — and which methods work best for B2B and B2C companies — so you know precisely how to go-to-market (GTM) successfully.

What is market segmentation?

Market segmentation is a marketing strategy in which you identify select groups within your target audience with shared characteristics so you can present specific offerings that appeal to their interests. This approach allows you to tailor communications to specific customer segments and relies heavily on data to remove the guesswork.

9 types of market segmentation

Many resources on market segmentation only address behavioral, geographic, demographic, and psychographic segmentation, which are more popular with B2C organizations.

In this guide, you’ll see the similar market segmentation approaches that B2B companies useintent, firmographic, persona, technographic, and journey stage segmentation — so you have a complete view of all segmentation methods.

Here’s a closer look at all nine types of market segmentation:

1. Behavioral segmentation

Behavioral segmentation helps companies determine buyers’ purchasing habits and behaviors. By looking at a website visitor’s digital footprint, organizations can group customers by:

  • Engagement level

  • Brand loyalty

  • Intent to buy

  • Potential needs/reasons for seeking a product or solution

  • Stage in the buyers’ journey

To draw the above conclusions, sales and marketing professionals may examine the number of sessions on their site, time on site, pages visited, and other site statistics.

While all businesses can technically use this method, B2B sales reps and marketers often refer to it as “intent segmentation.”

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2. Intent segmentation

Like behavioral segmentation, intent segmentation helps B2B organizations in particular determine when prospects are ready to buy based on their actions and intent signals on their website. These signals include website activity such as reviewing a pricing page or filling out a form to request a quote, scroll depth and time on page, referral traffic from paid ads and promotional emails, and incoming organic traffic from query searches with intent-based keywords.

For example, suppose a contact person at a target account reaches a company’s site after clicking on an ad about solutions for a problem they have and reads in-depth content about the benefits of the company’s offering. In that case, that account is likely considering the business’s solution as a potential option. But someone who arrived at their site after performing a more top-of-funnel search such as “what is ____” may be researching the type of problem they have and need some time or nurturing with additional content before they’re ready to purchase.

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3. Geographic segmentation

Grouping buyers by physical location is often easy to accomplish due to the generally static information. Geographics can influence buying habits, such as having parallel needs due to climate or resource access. A company may also use this method to target prospects and customers within a certain distance of their business.

Examples of geographic segmentation include:

  • City, state, and country
  • Zip code
  • Region
  • Seasonal climate
  • Population density

 

For B2B sales and marketing teams, this information is only one dimension of the more comprehensive picture that firmographic segmentation paints.

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4. Firmographic segmentation

There are millions of businesses to market to in the world, and B2Bs need to be able to identify the most promising accounts. Firmographic segmentation groups ideal companies based on:

  • Industry
  • Ownership and legal status (public, private, LLC, etc.)
  • Number of employees
  • Geographics
  • Annual revenue

 

Firmographics help companies tailor messaging to specific pain points prospective accounts may have based on these relatively unchanging traits.

Suppose a B2B’s ideal company operates in the accounting industry and is a mid-market to enterprise-sized organization. By filtering their audience by these characteristics, they can create a display ad that resonates more with their target accounts — perhaps using imagery and language about the challenges associated with tax time.

Additionally, this method optimizes a company’s resources and helps them evaluate new business ventures. Sales teams won’t need to assess an account’s budget and size to determine if it can support an offering because firmographic segmentation does it for them, saving valuable time and resources.

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5. Demographic segmentation

Market segmentation often brings to mind demographic factors like age, gender, and occupation. Demographic segmentation is a powerful method B2C companies use to create market segments, and here are a few of the typical ways they group consumers:

  • Age

  • Race

  • Gender

  • Religion

  • Occupation/income

  • Education

  • Marital status

The idea behind demographic segmentation is that people with common traits will have similar needs, interests, and purchasing habits.

Unlike B2C companies, B2B organizations are more interested in businesses, and businesses don’t have a gender, race, etc. However, a B2B team may still look at the demographic data of their contacts at target accounts when creating and segmenting by personas.

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6. Persona segmentation

Even if you’re marketing to businesses, there’s always a person on the receiving end of your message. Persona segmentation is critical for B2B marketing because it helps you deliver customized messaging that resonates.

Personas help companies create personalized content that solves their audience’s problems and targets specific segments within their market. Do they want to target the CEO or the frontline specialist? This segmentation method ensures they always speak to a particular role’s pain points.

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7. Psychographic segmentation

Psychographic segmentation groups ideal and existing customers by personality characteristics, making it a method exclusive to B2C organizations. Psychographic segmentation examples include:

  • Values

  • Goals

  • Lifestyles

  • Hobbies

  • Attitudes

  • Beliefs

Keep in mind that this data isn’t as evident and available and often requires intensive research.

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8. Technographic segmentation

An effective method for B2Bs to segment target accounts is through technographic segmentation. This approach uses data on a company’s technology stack — including existing tools, use, implementation details, adoption rates, and culture toward implementing new technology — to determine ideal customers.

A critical use case for technographic segmentation is identifying early adopters of new software, which can give a company an advantage over competitors offering similar products and services. When an account is ready to replace an older tool, a business can run targeted campaigns to show how their product improves upon the previous solution.

Obtaining technographic data often requires partnering with a reliable third-party data provider as B2B marketing and sales teams don’t usually have direct insight into prospects’ tools.

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Looking for an efficient technographic data provider? Demandbase’s Data Cloud gives you deep insights into the hardware and software your target accounts use and need.

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9. Journey stage segmentation

Where target accounts are in the B2B buyer journey plays a massive role in the sales and marketing activities they respond to. Segmenting by journey stage can help move prospects through the marketing funnel as they engage with content and speak with sales teams.

You might be familiar with the generic stages of the buyer journey — awareness, consideration, and decision — but there’s a little more nuance to examine:

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  1. Qualified: The account fits your target account description, but they may not be entirely aware of your brand.
  2. Aware: The account is aware of your brand, but is not fully engaged yet.
  3. Engaged: The account is engaging with you and understands your products, but is not yet showing buying intent.
  4. Marketing Qualified Account (MQA): The account is finally showing signs of being in-market.
  5. Opportunity: The account is close to the finish line and you’ve engaged the entire buying committee at this point.
  6. Customer: You did it! The account is a customer, but the journey doesn’t end here.
  7. Post-sale: Identify upsell and cross-sell opportunities to present to the customer at the right time.

 

Keeping these stages in mind when segmenting will help ensure you offer relevant and powerful messaging, yielding desired results.

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Top benefits of market segmentation

A market segmentation strategy can benefit companies in many ways. Here are four reasons why your team should consider implementing a targeted approach to marketing and selling through market segmentation.

More effective marketing and sales

Investing in a generic marketing strategy is like throwing darts at a target with the lights off. You might get a few on the board, but they’re nowhere near the bullseye. Similarly, it’s easy to think you know what prospects want based on anecdotes from your sales team or online reviews, but market segmentation uses data to remove the guesswork and hunches.

For instance, instead of developing a campaign targeting organizations in the healthcare industry, you can segment your audience to focus on this element, plus a host of other characteristics. Perhaps you want to focus on companies that are early adopters of technology with 1,000+ employees, have visited your site, and you want to reach C-suite executives. While the first search may yield a few positive results, the latter is much more targeted and will likely experience more success.

A healthy market segmentation strategy saves your team time and resources on pursuing dead-end opportunities, freeing you to invest in the most promising prospects. When you know what your customers want, you can engage them in a meaningful way and create a personalized buying experience that builds relationships.

Identify new markets and opportunities

The secret to growing your audience is leveraging high-demand, low-competition opportunities — but it can be challenging when your prospect’s and customer’s needs constantly change and evolve. Market segmentation paired with an account-based engagement platform like Demandbase’s ABX Engagement Platform will give you an inside look into how your buyers feel and think in real-time.

With these market insights, you can determine which behaviors are trends and which are potentially new markets worth exploring. Targeting untapped and emerging markets will help you grow your audience, improve product discovery, and increase conversions.

Additionally, market segmentation empowers you to identify gaps in the market that may inspire your team to create a new product or seek a cross-promotional relationship. Do most of your accounts engage in a certain activity and not have a solution? Have you seen a spike in specific keyword searches? While launching a new product may seem like a good idea, market segmentation helps your team assess your return on investment.

Cost efficiency

Instead of blindly pouring thousands of dollars into the next sales or marketing campaign, market segmentation lets you know how to allocate resources among your target audiences and where they are in the buyer journey.

For example, if you work at a B2B software company, investing in a campaign targeting accounts with a gap in their tech stack and that are comparing solutions would yield more results than targeting prospects who have an existing solution with a high adoption rate.

You can also use segmentation to pivot your GTM strategy as needed. Most customer journeys aren’t linear, so paying close attention to how needs and interests shift will give you the highest return on investment.

Create market segments easily with Demandbase

If customer engagement is down and your campaigns yield little to no results, it’s time to implement a market segmentation strategy. Now that you know your options and benefits, the next step is determining what method(s) would work best for your B2B or B2C organization.

Demandbase’s ABX Cloud helps B2B businesses launch impactful and segmented account-based marketing (ABM) campaigns so you can end omni-spam and ineffective messaging. Demandbase enables you to orchestrate sales and marketing activities and inject relevance into every stage of the buying journey.

Discover Demandbase’s ABX Cloud today and start segmenting your markets for better engagement and an improved customer experience.

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