ARS Market Research Guides
Market Segmentation: 4 Types, Examples and How to Segment Your Customers
Not every customer wants the same thing. Segmentation shows you who to serve first.
What is market segmentation?
Market segmentation means dividing a large market into smaller groups of buyers who share needs, habits or circumstances. A business then picks one or two groups, designs the product and price for them and speaks to them in their own language. It is the opposite of trying to sell to everyone.
The 4 types of segmentation
Age, gender, income, occupation, family size. Example: a school fee plan aimed at parents of children aged 3 to 6.
City, district, urban or rural, climate. Example: a snack brand using different flavours and pack sizes in the south and the north.
How often they buy, what they look for, brand loyalty. Example: a loyalty offer for weekly buyers and a trial pack for first-timers.
Values, lifestyle, attitudes. Example: a fitness app for people who value discipline versus one for people who value fun.
A simple 5-step method
- Define the decision. Are you choosing a launch city, a price or a message?
- Gather data. Use public data first, then a short survey. See primary vs secondary research.
- Find the splits. Look for differences in need, spend and frequency, not just age or income.
- Size and score each group. How many people, how much they spend, how well you can reach them and who else serves them.
- Pick and test. Choose one or two segments and pilot before you scale. Measure customer acquisition cost per segment.
A quick example
A tea shop in a college area surveys 200 customers. It finds three groups: students who buy one cup a day on a tight budget, office staff who buy twice a day and care about speed, and families who visit on weekends and want a seating area. Each group needs a different offer. The shop starts with the office staff, who spend the most per visit, and adds a morning express counter. A single question, who spends most and is easiest to reach, set the plan.
Trusted official resources
For official population and economic data, see the Ministry of Statistics and Programme Implementation and the Census of India. For business support, visit Startup India.
Related guides
Write your unique selling proposition | Brand awareness study | NPS, CSAT and CES explained | Market reports
Want to know which customers to target first?
ARS Market Research, Chennai, runs customer surveys and segmentation studies across India.
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