Use the following ways of segmentation that works best for your marketing strategy:
Demographic
These segmentations are classic. Divide your market into groups based on age, income level, and gender. Some marketing plans focus mainly on demographics because they work for strategy development. Business demographics may also be valuable. Government statistics tend to divide businesses by size (in sales or number of employees) and type of industry (using industry classification systems like SIC, the Standard Industrial Classification). If you’re going to be selling to businesses, then you’re likely to want to segment using types of business.
Geographic
This is another classic method of segmentation. This divides people or businesses into groups according to location. It’s very important for retail businesses, restaurants, and services addressing their local surroundings only. In those cases, you’d want to divide your market into geographic categories such as by city, ZIP code, county, state, or region. International companies frequently divide their markets by country or region.
Psychographic
This system divides customers into cultural groups, value groups, social sets, motivator sets, or other interesting categories that might be useful for segmentation purposes.
Ethnic
This type of segmentation is somewhat uncomfortable for those of us living in a country with a history of ethnic-based discrimination. Still, the segmentation by ethnic group is a powerful tool for better marketing.
Combination
Combining different segmentation methods are also quite common. You frequently see demographic and geographic segmentations combined – population groups or business types in a specific area are an obvious example, or ethnic groups in a certain city, or “boomers with babies” within reach of a shopping center. These are all combinations of factors.