Market Segmentation is a strategy used by businesses to determine a subset of customers to target within a market. Dividing a market up in this way allows businesses to make more effective use of their resources. This dovetails with the Product Manager’s number one goal in life: better understanding the customers’ needs!

Accurate Market Segmentation is a key practice for any Product Manager. Without this in-depth knowledge of the market, there can be no way of knowing your customers’ needs or which sections of the market to specifically target.


What is a Product Management Market Segment?

Market Segmentation involves identifying different groups of customers within a market who share common needs. In order for a group of customers to be considered as a Market Segment they must display the following characteristics as a group:

  • There are clear and definable differences between them and other segments in the market.
  • All of the customers within the segment are all of a similar type or nature.
  • The segment can be communicated with via the same variety of media.
  • The customers within the segment exhibit the same behavioural responses to market Stimuli.

Criteria to Segment Markets

Now that we know how a market segment is defined, we can take a look at what criteria we can use to distinguish between different customers in the market.

There are two set of criteria that can be used to segment the market. One is for the consumer (B2C) market and the other is for the business (B2B) market.

Criteria to Segment Consumer Markets (B2C)

The consumer market is made up of individuals that purchase for personal or family use.

  • Demographics: age; gender; ethnicity; culture; income; generation; occupation; education; family unit; family size;
  • Geographic: region; population size; city/rural; climate
  • Values and Beliefs: religion; politics; social class; causes supported; activities
  • Behaviour: brand loyalty; frequency of use; frequency of purchase; benefits needed; readiness to buy; seasonality

Criteria to Segment Business Markets (B2B)

The business market is defined as being made up of businesses that sell to businesses, sometimes known as B2B.

  • Geographic: area of operation – local, regional, national, international
  • Business Type: industry type; sector served; business size; business culture; purchasing process
  • Behavior: frequency of use; frequency of purchase; benefits needed; purchasing constraints;