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What is Segmentation in Marketing?

Segmentation is to process of sorting an audience of potential customers into clearly-defined categories and groups. Through segmentation, a business determines which people to target, how to shape products and services for that group, and set pricing and other marketing strategies.

Businesses usually base their segmentation decisions and strategies upon:

Geographic Factors – which involve region of a state or country, the weather or climate; whether the potential customer lives in an urban, rural or suburban area; and the density and growth of population.

Demographic Factors – including the customer’s age, religious affiliation, gender, ethnic background, nationality, income, family status (single, married, children), occupation, and level of education.

Psychographic Factors – consisting of attitudes, opinions, values or worldviews, interests, activities and lifestyles.

Behavioral Factors – involving a customer’s loyalty to a brand, the weight placed on prices, patterns and rates of using a product or service, and the customer’s pursuit of benefits.