Online shoppers are looking for a personalized experience. Market segmentation, also called customer segmentation, is a great way to deliver this type of experience. While it is a fundamental marketing strategy for any ecommerce business, many store owners and marketers find themselves wondering, “What is market segmentation? It is a way for shop owners to separate visitors into different groups. In this way, it is possible to create a more personal experience based on the characteristics, behaviors, needs and desires of individual customer groups. Most brands that use market segmentation in their marketing plan earn more, have happier customers, and perform better than their competitors.

Market segmentation: definition

What is meant by market segmentation, and what is a segment? Market segmentation is when visitors and customers are divided into segments , or groups, based on their common characteristics. There are endless ways to divide your customers into groups, and how to segment the market depends on so many aspects. That’s why your definition of customer segmentation can be – and likely will be – different from that of your competitors .

Here are some examples of criteria you can use to create market segments:

• VIP: Customers who shop more often or spend more money
• Active and longtime users who are recurring customers
• Reactivated customers who have made a purchase have been inactive for some time and then made another purchase
• Low-level, recurring customers who shop less often and spend less money
• New customers who have just made their first purchase
• New visitors who have just signed up for your newsletter without making a purchase

Here is an example of how market segmentation could affect your revenue:

By dividing all of your customers into smaller free opportunity seekers email addresses market segments, you can target them better than you would if you used a basic strategy for all. This creates a better user experience for each type of customer, leading customers to spend more money and be happier.

The goal is to find buying patterns in certain groups. For example: Do you sell more winter boots to customers who live in countries and regions where it snows?  Do customers spend more than $ 200 on a single order when they’ve visited your site once or twice before? Do your loyalty program members prefer free shipping over a 20% discount?

Market segmentation: what are the benefits?

You might be wondering why segment the market – well, online shoppers have access to fast technology and thousands of websites to choose from to buy what they want. Over the past decade, this has created a huge demand for a personalized shopping experience. In fact, one study found that 64% of shoppers want personalized offers. If the experience isn’t personalized, 52% said they will likely choose to shop at another store.

And this change is paying off. According to eMarketer, 48% of US marketers said that since they customized their websites and applications, their revenue has increased by 10% or more. Here are some of the benefits that demonstrate the importance of market segmentation:

It saves you time and money. Instead of using a one-size-fits-all strategy for all of your customers, market segmentation can help you target your marketing efforts at specific groups of people . This means that you will not waste time and money on ineffective campaigns, because your efforts will be targeted and based on customer data.

 Types and examples of market segmentation

Demographic market segment

How is demographic market segmentation done? Market demographic segmentation is when you divide customers into groups based on their demographic information, such as age, income, gender, education level, single or married, family size, ethnicity, profession, religion, and more.

Demographic segmentation is the most popular type of segmentation because it is the easiest and most reliable way to divide customers. Dormify is a dorm and apartment furniture company that focuses on college students furnishing their dorms and homes. The company wanted to market a special collection of accessories and clothing for women who were part of the student communities – a more specific demographics than just women enrolled in college. The marketing team looked at the company’s data to see who interacted with the emails and advertisements of the female student communities and “Greek life” (many student communities use Greek letters for their names). Then they used this information to create a list of people who would receive emails referring to these types of products.

Through this and other segmentation efforts, Dormify has increased its email marketing revenue by 92%.

Geographic market segment

How to segment the market based on geographic criteria? Geographic segmentation is when you separate customers based on where they are. If you are an international store, this can be by continent or by country. It is also possible to segment by region, state, city, and even neighborhoods or areas within a city. Patagonia, an outdoor apparels and equipment company, is know for hosting local events in cities. Moreover, where there is a strong customer base. The company hosted an event on Manhattan’s Upper West Side in one of its stores. He invited customers to browse a photo gallery, drink beer from a local brewery, and even meet the artist. Although Patagonia has stores throughout the United States. The email inviting this event sent to the company’s subscribers. Moreover, who live in the area and who were within walking distance.