When working on the marketing strategy for your business, you may come across the terms market segmentation and target market. While the two terms are interrelated and part of the same marketing process, they are not the same. It’s important to understand the nuances and differences between market segmentation and target market so you can effectively define them for your business.


Market segmentation is the process of categorizing the market into different groups, according to demographic, geographic, behavioral and psychographic traits. The target market is the market segment that the business is focusing on for a specific product or marketing campaign.

Starting With Target Market Segmentation

Both market segmentation and the target market are important elements of the overall market strategy of the business. In order to successfully develop a marketing strategy, the company needs to identify who they are targeting. The way they establish their target market is through market segmentation.

The difference between market segmentation and market segment is that the former is the process, whereas the latter is the result. In order to create market segments, the business needs to go through the process of market segmentation. The reason market segmentation is so critical to business is because it is difficult to satisfy the needs of all consumers with the same products and messaging. Consumers have different interests, needs, goals, likes and dislikes, so businesses need to cater to groups of consumers in different ways according to their traits.

Ways to Segment the Market

While there are several ways to segment the market, they can be categorized into four main groups:

  • Demographic: This is the most basic way to segment the market. Businesses can group consumers based on age, gender, race, religion, nationality, occupation, income, family status and social class. For example, a business can target women ages 19 to 35 who have children and work a full-time office job.

  • Geographic: Where a consumer lives affects their interests and purchasing habits. When segmenting geographically, businesses group by location, climate, population density and size of region. For example, a business can target people who live in warm climates in highly dense cities, or people who live in Toronto, Canada.

  • Behavioral: This segmentation type involves understanding the way people behave towards products and services. It is affected by what benefits consumers are looking for, whether they are loyal to a brand, how often they plan to use the product, how ready they are to buy and whether they have already purchased from the company before. For example, a business can target loyal customers who have purchased the product at least twice before.

  • Psychographic: The kind of lifestyle a consumer lives is an important part of market segmentation. A consumer’s hobbies, opinions, attitudes, values and interests are how a business can segment their market. For example, a business can target consumers who value family and community and enjoy group sports activities with their loved ones.

Evaluating Segments for Your Business

Once a business has successfully segmented its market into various groups, it’s time to evaluate each market segment and ascertain whether it is financially sustainable to pursue. While a business may have several market segments it is interested in, only one or two will have the criteria needed for a successful target market.

Examples of market segmentation companies may have are men ages 45 to 60 who are interested in fitness and men ages 60 to 75 who are interested in fitness. While both groups are interested in fitness, the ages of the groups of each market segment vary drastically and will affect their interests, wants and needs. If the business sells fitness equipment, they may only be able to target one of these groups, and so need to evaluate each segment to see which one will yield the best return on their investment.

Evaluation criteria for market segments include:

  • Size: The market segment needs to be large enough for the company to justify targeting them with specific messaging and products.

  • Uniqueness: The market segment needs to be substantially different from other segments in order to have unique needs that the company can cater to.

  • Accessibility: The market segment needs to be easily reachable by the company through communication and distribution channels.

Writing the Customer Persona

After a business has evaluated its potential market segments and established their target market, it’s important to develop a customer persona. This is a vital marketing document that outlines all of the important traits of an ideal customer within the target market that affect the way they purchase and look at products.

The customer persona should be detailed and include information on all four segmentation categories: demographic, geographic, behavioral and psychographic. This helps the business to build a comprehensive picture of who they are selling to. It also provides a quick reference point so that anyone who is working on marketing or product messaging can quickly understand the consumers' needs, wants and goals.

Understanding the Big Picture: The 4 Ps of Marketing

With a comprehensive target market established through market segmentation, the business can develop their target market strategy. Using the four Ps of marketing, also known as the Marketing Mix, helps businesses to ensure they are building a strong foundation for reaching their consumers.

The Marketing Mix includes:

  • Product: What does the target market want and need? The business needs to establish what kind of product or service the consumer is looking for. What kind of problems are they facing, and how can the company help solve them? The business also needs to consider what competitive products already exist, and how they can make their product stand out.

  • Price: How much is the target market willing to pay for the product? What is the product worth to them? It’s important to review how competitive products are priced when developing the pricing strategy. Pricing too far out of the average price range can affect the way the target market sees the value of the product, which can have negative or positive effects.

  • Place: Where does the target market shop for these kinds of products? Is it in store, online, at pop-up shops or at niche markets? It’s important to make the buying experience as convenient as possible. If the target market primarily shops online, for example, not having an e-commerce option can negatively affect sales.

  • Promotion: How will the business communicate the benefits of the product to the target market? What media channels will the business use to reach the consumer? It’s important to develop product positioning that is highly specific and appeals directly to the needs of the consumer.

Developing an Integrated Marketing Communications Strategy

The promotional strategy of the business is a vital part of market segmentation and reaching the target market. It’s critical to understand what kind of messaging and mediums the target market responds to. Developing an integrated marketing communications strategy and ensuring all communication is aligned helps to ensure that the target market always encounters consistent messaging that compliments the company’s main goals.

The five key ways to reach the target market with promotions include:

  1. Advertising: Includes print publications, online publications and sites, search engines, social media, TV, radio and billboards.

  2. Direct marketing: Involves sending highly targeted messaging through postal mail, email or phone.

  3. Personal selling: A great way to build relationships with prospects, this involves direct one-on-one selling in person or over the phone.

  4. Sales promotions: Discounts, buying incentives and promotional offers can entice certain kinds of consumers.

  5. Public relations: This involves managing the reputation of the business through press releases, media interviews, community involvement and sponsorships.