Glossary

Market segmentation

Dividing a market into groups with shared needs or characteristics, so you can decide whom to serve and how.

Why it matters

Different customers can need different things from the same business. Segmentation helps you see those differences before deciding what to offer, what to say and where to invest.

A simple example

Illustrative example, not client research

A local gym might explore two groups with different priorities.

Routine-driven members

Want predictable sessions that fit around work.

A possible response: reliable early-morning classes.

Coaching-led beginners

Want guidance and reassurance when starting.

A possible response: an introductory coaching program.

These are starting hypotheses. Research would need to test whether the groups are distinct, valuable and reachable. People may fit more than one group.

Segmentation is not targeting

Segmentation identifies meaningful groups. Targeting is the decision about which groups to prioritize.

Age brackets alone may tell you little about why someone buys. Look for differences that help explain needs and choices.

Before acting on a segment

Do people in this group share a need that changes what they choose?
Can you estimate its size and potential value?
Can your business reach and serve it well?

Behavioral segmentation: Grouping customers by what they do, such as how they choose, buy or use a product or service.
Market sizing: Estimating the number of potential buyers or the sales value of a defined market over a stated period.
Positioning: Defining how you want a particular audience to understand your offer compared with the alternatives.