Retail Market Segmentation

Retail Market Segmentation

More often than not, it is important to divide a heterogeneous market into smaller and more defined segments based on the similar characteristics that your customers share such as their needs, location, buying behavior, interests and other variables. This is the concept of Retail Marketing Segmentation.

Using market segmentation techniques allows you to target your customers based on their unique characteristics and approach them with different sets of promotional opportunities and find opportunities in your market.

This market segmentation can come in four types and they are listed below:


Demographic segmentation uses the statistical data of your customers to group them and it is one of the most popular types of market segmentations that are commonly used. It takes into consideration variables of your customers such as their age, educational level, occupation, gender etc.


Behavioral segmentation deals with how your customers act. It focuses on their specific reactions and attitude towards your brand, how they go through their decision making and buying processes and their spending habits. Behavioral segmentation requires you as a retailer to know much about your customers’ actions.


Psychographic Segmentation helps you group your customers based on their personalities. It focuses on their intrinsic traits such as their values, subconscious and conscious beliefs, interests, priorities, attitudes, lifestyles and opinions. To understand your customers based on this type of segmentation, you are required to employ methods such as surveys and hold interviews with them.


Geographic Segmentation is the simplest type of market segmentation because it basically categorizes customers based on geographic borders such as cities, states, zip codes, climates, countries etc. You as a retailer need to keep up with the events that happen in different geographic regions so as to know when and how to bring in marketing initiatives.



Being able to segment your market effectively comes with many advantages.

Market segmentation helps you to decide locations for your retail stores outlets. By understanding the geographic borders of your target customers, you will be able to set up your stores’ outlets in their locations. A location even if attractive and has a good traffic flow but serves no target market is as good as no location at all.

It helps you understand your customers’ behavior and build deeper customer affinity. When you understand why your customers behave the way they do, their needs, interests and values, you will be able to deliver efficient marketing strategies that will serve them and also create strong bonds between them and your brand.

Further, it helps you to identify the most effective marketing tactics and remain focused. It can be difficult to choose the exact marketing strategy that will attract your target customers with the several marketing strategies available, but with market segmentation, you can choose the marketing strategy that will work best for your target customers and also avoid distractions that will take you away from your target market.

A tip to follow in segmenting your market is not to remain restricted to a type of segmentation. You can implement as many types as you deem fit for your market. The important thing is that you choose the ones that will help boost your market.