All products have a market that demands them; market segmentation is the practice of further dividing the market into smaller groups so that an organization's marketing department can target those groups more effectively. If marketing employees can identify target groups that are large enough to justify the extra resources necessary for specific targeting, then market segmentation may be more effective than mass marketing.
Geographic segmentation divides the market into regions characterized by climate, population and cultural differences. This type of segmentation often occurs naturally. For example, a nationwide company that produces outdoor and landscaping equipment won't advertise its line of snow shovels in Florida. However, some geographic segmentation strategies are deliberate: McDonald's sometimes produces unique food items in different countries based on cultural tastes.
Demographic segmentation divides the market into groups based on age, family, income, occupation, education, religion and many other variables. For example, a private school will typically segment the family market and target higher-income families. Demographic targeting is so specific that marketers have developed acronyms for certain markets; for example, DINKS stands for double income, no kids. Most tactical plans in marketing involve demographic segmentation.
Behavioral segmentation focuses marketing efforts on consumers' researched behavior toward the product. For example, if most consumers purchase a product during the Christmas holiday season, behavioral segmentation would encourage heavier marketing in the time leading up to that season. In addition to specific occasions like holidays, other variables include usage rate for the product, the benefits consumers seek from the product, and consumers' status as a first-time or regular user.
Marketers who distribute activities, interests and opinions (AIO) surveys are conducting research for psychographic segmentation, which alters marketing strategy according to consumers' lifestyle preferences. This method of segmentation is useful when an organization wants to make its brand's image more appealing to specific consumers. By discovering the values and attitudes of consumers who most frequently use the product, organizations can improve their public relations strategies and build brand loyalty.