Types of consumer segmentation and when to use them

Consumer segmentation enables you to uncover valuable audience insights that can help to dictate the content, targeting and media buying strategy of your digital campaigns. It allows you to understand which audiences exist, who to target and why, and the most effective way to reach them.

Unlike customer segmentation which relies on customer CRM or e-commerce data, consumer segmentation involves using third party data, research reports and audience intelligence platforms like Audiense, to build out a comprehensive view of your target audience.

Although it may seem like a minefield, consumer segmentation can be broken down simply into the following types:

• Demographic & socioeconomic segmentation
• Geographic segmentation
• Behavioural segmentation
• Psychographic segmentation
• Social media segmentation
• Needs-based segmentation
• Value-based segmentation
• Firmographic segmentation

Let’s take a closer look at each and how to know when to use each one appropriately to master your audience and marketing goals. 

Types of consumer segmentation

Demographic & socioeconomic segmentation

Demographic segmentation is one of the most widely used and simple-to-understand types of consumer segmentation. At its most basic level, demographic segmentation looks at age and gender, but socioeconomic factors such as household income, marital status, occupation or industry and education (e.g. are they educated to degree level) also fall into this segment.

In addition to the categories listed above, Audiense Insights also provides interests and bio keywords (the most common words used to describe themselves), which helps to provide another layer of insight when you’re building out your audience segments.

Example: A SaaS company could use demographic segmentation to target high-income software developers in the tech industry, who are male aged 34-45. 

When to use it: Use it to tailor your email marketing campaigns to the different demographic segments your brand targets. Eg. A brand might discover that their demographic segment of males aged 34-45 are very interested in features vs. product sales or other types of email announcements, so they may choose to only send them emails that talk about new features:

Geographic segmentation

Another widely used type of consumer segmentation is geographic segmentation, which clusters audiences by location, usually at country and city level.

The needs and desires of consumers can vary wildly from city to city, especially in larger countries with particularly topographically or economically diverse regions, e.g. the US. Geographic segmentation is extremely valuable for international businesses to help them to define the nuances in consumer demands in different regions and identify any cultural characteristics which can form part of their targeting strategy.

Example: A fast food company could use geographical insights to localize their marketing strategy in order to succeed in both Japan and in the US and resonate with both audiences. 

When to use it: Use it to tailor your product offering to the taste and preferences of the audiences of a specific region. Eg. McDonald's might discover through geographic segmentation that their Japanese audiences have a preference for “twisty pasta” so they choose to change their menu items to meet these preferences:

Behavioural segmentation

Behavioural segmentation, as the name suggests, segments audiences by behaviours and habits. This includes buying habits and online behaviour, including platform and technology usage and most active hours online.

This type of consumer segmentation can help your business to tailor your marketing efforts to garner the most positive results, e.g. scheduling organic social posts or email campaigns for when your audience is most active online.

 ‘Purchase Influence Factors’ within the Audiense Insights tool can also help to inform important strategic decisions about the most effective channel mix for your audience. For example, knowing whether your audience is most influenced by online ads or the people closest to them, may steer whether influencer, paid social or TV campaigns are likely to be the most effective option.

Example: An online fashion retailer could segment their entire audience to understand the best marketing channel mix to reach each audience effectively. 

When to use it: Use this to uncover whether your audience is most influenced by online ads or the people closest to them. This will help you decide whether influencer, paid social or tv campaigns are likely to be the most effective option.  E.g. — A brand might discover that the majority of their audience spend more time on TikTok than they do watching TV, so they can allocate the majority of their ad budget to hiring their audiences top TikTok influencers like Alix Earle. 

Discover the best marketing mix for your audience by running one simple report. 

Psychographic segmentation

Want to know what makes your audience tick? This is where Psychographic Segmentation comes into play. This type of consumer segmentation is similar to Behavioural Segmentation in that it seeks to understand an audience at a deeper level than demographics but is different in that it is focused on their personality, beliefs and interests, rather than a measure of their past actions.

The Audiense Personality Insights tab, powered by IBM Watson, provides sophisticated insights into an audience’s personality type, needs and values and analysis into what drives these values, e.g. excitement or curiosity. Alongside Behavioural and Demographic and Socioeconomic segmentation, Psychographics are powerful to build a complete picture of your target audience, so you can be confident exactly who you are targeting, why and how.

Example:  A CPG brand deciding what the theme of their Super Bowl commercial should be centered around, could use personality insights to understand who their audience is at their core, like “adventurous, fast-paced, and energetic”, and mirror elements of their commercial to resonate with them. 

When to use it: Use this when you want to create any type of content or ad that relates to who your audience is and what they care about most. 

Social media segmentation

Social Media segmentation groups your different audiences by platform, so you can understand where they are most active. This is a useful insight as it can help you to determine where to place your ads or amplify your content for the best results.

The image below, taken from an example report shows that this audience is 7 times more likely to use Snapchat and almost 2.5 times more likely to use Spotify versus the baseline, which suggests that these are the most valuable platforms to leverage.

Example: An automotive brand that targets high-networth professionals via LinkedIn would use these insights to decide which other channels to build a social media strategy for, if referring to the image above they would choose to include TikTok and Reddit in their strategy. 

When to use it: Whenever you need to know which social channels to have the greatest presence on in order to reach your audience. Ie. Wendy’s knows that their target segments are active on X so they spend the majority of their energy on building out their audience and presence on this platform. 

Find where your audience spends their time on social media by running your own report today!

Needs-based segmentation

From the same family as “Psychographic Segmentation”, Needs-Based segmentation focuses on grouping consumers based on their different needs. Needs drive consumer decision making when they’re deciding between different products and services. 

There are three basic types of consumer needs: 

• Functional needs: they decide on the best product that helps them complete a certain task (ie. I buy the best hand mixer for my baking needs) 
• Social needs: someone buys something based on how they want others to perceive them (ie. all my friends buy the same from the same clothing brand and I want to share that connection with them so I buy from the same clothing brand) 
• Emotional needs: the customer buys something based on how they want it to make them feel (ie. I want to feel more confident around my high-net worth coworkers so I buy an expensive watch) 

The “needs” insights are a piece of the Audiense Personality Insights tab, powered by IBM Watson, and they narrow it down your audience’s main “need” to consider when creating a product or service for them. 

Example: This audience makes purchase decisions based on their need for efficiency, so if a Tech brand were targeting them they would focus more on creating a laptop that works fast and efficiently, and focus less on how the laptop “looks”. 

When to use it: When you need to know what features to prioritize when it comes to enhancing your product offering or creating new products. Eg. Apple knows that their audience needs high tech products that are easy to use; so they prioritize this need. 

Surface your audience’s top “needs” now by running an Audiense report.  

Value-based segmentation

This type of segmentation groups customers together based on a calculation of their lifetime value. Some customers are more valuable to a company over time, compared to others based on what they typically spend or how long they are a customer for. 

Example: A high end furniture brand might invest more in their marketing efforts to target customers who they know have multiple homes and have purchased over $1500 worth of product, and might spend less on a customer who came in twice to buy smaller items as gifts. 

When to use it: Use value-based segmentation to help divvy up your marketing budget and place the majority of your spend advertising to people who are your highest value customers. 

Firmographic segmentation 

Firmographic segmentation is a type of B2B segmentation that groups customers based on shared company attributes like: 

• Job titles 
• Industry 
• Revenue or performance 
• Company headcount 
• Geographic location
• Stage that they’re in in the sales cycle 
• Structure of the organization 

Example: A B2B SaaS company could use this type of segmentation to group or isolate all the senior “decision makers” at large CPG companies to specifically target on LinkedIn.

When to use it: Use it whenever you’re targeting a B2B audience! 

How to select the best segmentation type for you 

Choosing the best type of segmentation depends on what you are trying to achieve, or create when it comes to your audience. Ask yourself these questions:

• What is the overall marketing goal? 
• What characteristics best define the audience you are trying to reach? 
• What specific problems do you solve by segmenting your audience this way/ what information gaps are you able to fill?
• What types of data do you have access to (ie. if you don’t have psychographic insights on your audience then you can’t perform psychographic segmentation without a tool like Audiense)?

If you need help deciding on which type of segmentation to use, this table can help you: 

Easily try each type of segmentation on your audience, with Audiense insights.  

How to segment your audience with Audiense (4 easy steps)

Segmenting any audience with the Audiense platform is easy, just follow these steps:

Step 1: Decide, based on your marketing goals which type of segmentation you will use

Step 2: Define your audience (this will tell Audiense who to collect and segment)

Ie. Tech Moms from Chicago (Demographic segmentation)

Step 3: Select the number of segments you want your audience to break out into. Do fewer segments for broader audience groups, and do more segments if you want to uncover those smaller more niche consumer groups.

Step 4: Click into and analyze each segment (or cluster as we like to call them) to learn exactly who they are and how to best market to them. 

Segmentation made easy

In so many cases, marketers want to try out a specific segmentation type but they don’t have access to the right consumer data. 

With Audiense, obtaining consumer data is never an obstacle - it allows you to collect and segment any audience based on the characteristics you choose.

Sign up to try Audiense and test out each of the segmentation types we mentioned above!