If you have responsibility, either as part of University assignment or in your role as a marketer for an organization, of constructing a suitable approach for the segmentation of consumers – then you will probably benefit from this article, which highlights the main generic approaches to constructing market segments.
In other words, here is a list of 15 possible market segments (as shown in the below diagram) that could be argued exist in virtually any market. Therefore, if constructing your own segmentation approach, the following list and discussion should be quite helpful. Keep in mind, however, that there are more segments listed here than you would probably need – but it is likely that only some of these segments will be appropriate for your particular challenge.
Ideally, what you should look to do is to select 4 to 8 of the following market segment examples and then fine tune them for your requirements.
Contents
A generic list of possible market segments
Convenience driven consumers
Many markets will have a large segment of consumers that are looking to simplify the purchase or the process. For example, the fast food industry was able to generate a large market and share of food consumption because it offers the benefit of convenience. And obviously, as suggested by its name, convenience stores offer the same benefit.
Convenience is also important in many service industries where a complicated process may exist. For example, many banks have tried to simplify and speed up the loan application process – this is another example of convenience.
Online shopping websites and information sites also provide the benefit of convenience, which attract many consumers.
Key Characteristics:
- Attracted to products that save time or reduce effort.
- Responsive to features like easy ordering systems, quick delivery, or nearby locations.
Examples:
- Fast food outlets, convenience stores, online platforms, and automated services.
Budget conscious shoppers
Virtually all markets will have a group of consumers that are very price sensitive. These consumers may make their purchase decision based on the lowest price, or select the product that represents the best value for money.
These consumers are very attracted to sales promotions and special offers. As a result, they have limited brand loyalty as they see limited financial benefit in remaining loyal while paying a price premium.
Some consumers in the segment may have a limited income, but many see themselves as “smart shoppers” and enjoy the challenge of saving money.
Key Characteristics:
- Often compare prices and rely on discounts, promotions, and special offers.
- Low brand loyalty due to prioritizing cost over consistency.
Examples:
- Discount retailers, promotional campaigns, and value-packaged goods.
Focus on quality
The opposite of the budget conscious consumer market segment are those consumers interested in higher quality products and services. This does not necessarily mean that this market segment likes to “waste” money – instead, many consumers in this segment believe that buying higher quality represents better value over time.
In some markets, consumers are attracted to high prestige products and brands in order to demonstrate their success to others. And some other consumers in this segment simply like having nice products and good service.
Key Characteristics:
- Equate quality with long-term value and reliability.
- Often attracted to premium or prestige brands.
Examples:
- Luxury goods, high-end electronics, and fine dining establishments.
Rational, value for money
The consumers in the rational market segment are typically higher involved consumers in the purchase decision and look to make decisions on a “best product solution” basis wherever possible.
They are more likely to conduct Internet and word-of-mouth research and will compare products on an attribute and price basis. Therefore, product design is probably more important to this particular market segment.
Key Characteristics:
- Evaluate products based on features, benefits, and price comparisons.
- Likely to rely on reviews, word-of-mouth, and detailed product information.
Examples:
- Electronics, cars, and appliances.
Attracted to strong brands
This market segment is less involved in their purchase decision, and will rely upon a strong brand to guide their purchase decision. In particular, we may see this in purchases of electronic and entertainment products, whether market segment will be primarily attracted to a brand with a strong reputation
Consumers in this market segment will take comfort in that buying from established brand is a safe and low risk decision, particularly for purchases that they do not undertake frequently.
Key Characteristics:
- Seek established brands for trust, reliability, and status.
- Particularly prevalent in tech, fashion, and automotive markets.
Examples:
- Well-known electronics brands, luxury fashion labels, and high-end car manufacturers.
Environmentally aware
An emerging consumer segment in many markets consists of people who take into account the environmental impact of their purchases.
This will extend to components of the product itself, packaging, ability to easily dispose of product after use, reputation of the brand itself (that is, its corporate social responsibility reputation).
Key Characteristics:
- Look for eco-friendly packaging, ethical sourcing, and low environmental impact.
- Willing to pay a premium for green products.
Examples:
- Organic groceries, electric vehicles, and reusable household items.
Family focused
This market segment is a family or household unit that has one main grocery buyer. This consumer is purchasing on behalf of themselves and other people in the family unit. The goal is to purchase array of products that are suitable for a range of age groups and needs.
They may be more attracted to variety, as well as brands that resonate well with their family members. It is in this type of market segment that the various decision roles (such as user, influencer, decider) needs to be considered more closely.
Key Characteristics:
- Value versatility and family-friendly options.
- Influenced by products that cater to multiple age groups.
Examples:
- Family-sized food packages, multi-purpose vehicles, and children’s toys.
Health and diet conscious
In various markets, particularly food, beverages, medicines, vitamins, health centers – this is a size-able market segment that is quite interested in the health and well-being aspects of the product.
This market segment can be broken down into two further sub-components – the first consists of consumers interested in general well-being – and the second group consisting of consumers that have specific health requirements and goals.
Key Characteristics:
- Seek nutritious, organic, or low-calorie options.
- May have specific dietary requirements or health goals.
Examples:
- Health supplements, fitness equipment, and organic groceries.
Service/relationship focus
Particularly in service industries, there would be a size-able market segment of consumers that would be interested in quality of service provided and/or developing a relationship with the firm and its staff. It is the service and relationship aspects that become more important, as opposed to price, product or the other elements of the marketing mix.
Industries in particular that would need to consider this market segment would include: hospitality, travel agents, hairdressers, beauty spas, banking, fitness centers, local restaurants, and so on. That is, any industry where there is a reasonable degree of customer-employee direct contact.
Key Characteristics:
- Prefer brands that emphasize customer relationships and exceptional service.
- Found in industries like hospitality, beauty, and financial services.
Examples:
- High-end hotels, personal trainers, and boutique retail stores.
Flexibility is important
The tailoring of a product offer is becoming more important to some groups of consumers, as highlighted by this particular market segment. The era of mass marketing and generally passed its prime and some consumers are looking for the ability to have products tailored to the particular needs.
This is quite common in service industries of course, but is now extending to the production of physical good (for example, it is possible to tailor a sports shoe to your needs, via an online ordering system).
Key Characteristics:
- Attracted to products that can be personalized or adapted to their needs.
- More common in luxury and tech markets.
Examples:
- Customizable sports shoes, tailored suits, and modular furniture.
Social status
This particular market segment can be considered an extension of “focus on quality” customers segment discussed above. However, in many cases, the size of this market segment is large enough to be warranted as its own target market.
Consumers in this segment use brands and products as a means to signal their self-identity and social status. This would be quite common in markets such as cars, alcohol, cigarettes, holiday destinations, restaurants, clothing, jewelry, and so on. That is, visible public products which other consumers (friends, family, and work colleagues) would be aware of.
Key Characteristics:
- Prefer visible, premium products that signal success or uniqueness.
- Found in markets like fashion, jewelry, and cars.
Examples:
- Designer clothing, luxury watches, and high-end vehicles.
Variety seekers
Many markets will have a group of consumers who seek out variety. Some consumers simply like change and choice, whereas others like to experience new things.
These consumers are quite responsive to product line extensions and new products – as a result, they are an attractive initial target market to generate sales for a new product, as they are more responsive and are likely to have a greater proportion of opinion leaders.
Key Characteristics:
- Respond well to new product launches and seasonal offerings.
- Likely to be early adopters and opinion leaders.
Examples:
- Snack foods, beverages, and tech gadgets.
Benefit seekers
In some markets, there are usually multiple segments that are seeking a particular benefit from a product – making benefit segmentation the most suitable market segmentation approach. The classic example is in the toothpaste market, where consumers after a particular product benefit, such as teeth whitening, fresh breath, cavity protection, and so on.
There is a good example on this website for using benefit segments in the cold beverage market. Obviously, the marketing key in this segment is to position products tightly around a unique product benefit – which would be an appropriate marketing strategy in a clustered and competitive market (often in fast moving consumer goods).
Key Characteristics:
- Select products based on their primary benefit or feature.
- Likely to switch if another brand offers better benefits.
Examples:
- Specialized toothpaste, functional beverages, and skincare products.
Just for me
The “just for me” market segment of those consumers interested in their own needs and pleasures. They will seek out product solutions that make them feel good, even though they may be expensive or not necessarily healthy.
Markets that would have this sort of consumer segment would include: restaurants, travel, beauty spas, personalized services, alcohol, cigarettes, some food and beverage markets, and so on.
Key Characteristics:
- Value experiences or products that make them feel special.
- Less price-sensitive and driven by emotional satisfaction.
Examples:
- Spa services, luxury vacations, and artisanal chocolates.
Existing customers
The final market segment provided in this list of potential market segments is simply the firm’s/brand’s existing customer base. Although this would need to be segmented down further, as per the above market segments, it is highlighted here as it is sometimes accidentally overlooked.
This oversight situation occurs because some marketers are overly focused upon growing the business through new customer acquisition, rather than the mechanics of retaining existing customers.
Key Characteristics:
- Familiar with the brand and its offerings.
- May need tailored strategies to maintain loyalty or encourage repeat purchases.
Examples:
- Membership programs, loyalty rewards, and targeted cross-sells.
For and Against: Using Generic Segments in Market Segmentation
When developing a market segmentation strategy, one common approach is to use generic segments, which are predefined categories like “convenience seekers” or “budget-conscious consumers” that can theoretically apply to any market. While this method offers certain benefits, it also comes with limitations that need to be carefully considered. Below is a detailed discussion of the advantages and disadvantages of using generic segments.
Advantages of Using Generic Segments
1. Quick and Easy to Implement
- For: Generic segments are predefined and well-understood, making them a time-efficient starting point for segmentation. Marketers can focus on tailoring these segments to their specific market rather than building a segmentation model from scratch.
- Example: A new marketer at a fitness center can start with generic segments like “health-conscious” or “socially motivated” and adapt them based on customer data.
2. Broad Applicability Across Markets
- For: These segments work in diverse industries, providing a universal language for discussing consumer needs. This can be particularly useful in industries with wide-ranging customer bases, such as retail, food, or financial services.
- Example: “Convenience-driven consumers” can be a relevant segment for both grocery delivery apps and fast food chains.
3. Good for Initial Exploration
- For: When data is scarce or a business is entering a new market, generic segments can act as a thought-starter or framework for understanding potential customer groups.
- Example: A startup with limited resources can use generic segments to identify broad customer groups before investing in detailed customer research.
4. Familiarity with Established Profiles
- For: Generic segments often align with widely recognized consumer profiles (e.g., “budget-conscious” or “premium-focused”), which can simplify communication and strategy development.
- Example: Teams across marketing, sales, and product development can easily align their strategies around familiar consumer archetypes.
5. Cost-Effective
- For: Developing segmentation models based on unique research can be costly and time-consuming. Generic segments reduce this cost by leveraging existing frameworks.
- Example: Small businesses with limited budgets can adopt these segments as a practical alternative to conducting extensive market research.
Disadvantages of Using Generic Segments
1. Lack of Specificity
- Against: Generic segments are broad and may fail to capture the nuances of specific markets or customer needs. This can lead to a segmentation model that lacks precision and effectiveness.
- Example: A fitness center using the generic “health-conscious” segment might overlook key differences between older adults exercising for mobility and younger adults pursuing body sculpting.
2. Risk of Over-Simplification
- Against: Simplifying consumer motivations into predefined categories may ignore deeper, data-driven insights, leading to less effective strategies.
- Example: A retailer might miss emerging trends, such as the intersection of sustainability and affordability, by solely focusing on the generic “environmentally aware” segment.
3. Overlap Between Segments
- Against: Generic segments often overlap, making it difficult to differentiate between customer groups. This can dilute marketing efforts or lead to unclear targeting.
- Example: “Variety seekers” and “trendsetters” may exhibit similar behaviors, causing confusion in tailoring specific campaigns.
4. Ignores Contextual Factors
- Against: Generic segments may not account for cultural, geographic, or industry-specific factors that influence customer behavior.
- Example: A fast food chain in the U.S. may successfully use the “family-focused” segment, but this might not translate well to markets where dining out is less common for families.
5. Limits Innovation
- Against: Relying on predefined segments can discourage innovative thinking and deeper exploration of unique customer needs.
- Example: A tech company might miss opportunities to identify new customer groups, such as “remote workers,” by adhering to traditional segments like “convenience seekers.”
6. Less Relevant for Niche Markets
- Against: In niche markets, generic segments may be too broad to provide actionable insights.
- Example: In the high-end watch market, segments like “budget-conscious consumers” would be irrelevant, while factors like collector status or appreciation for craftsmanship would be more significant.
When to Use Generic Segments
- Start-Up Phase: Generic segments are useful for companies in their early stages or entering a new market without prior data.
- Broad Consumer Markets: Industries with wide consumer bases, such as retail or food, benefit from the universal applicability of generic segments.
- Cost or Time Constraints: When resources are limited, generic segments provide an efficient way to start developing strategies.
When to Avoid Generic Segments
- Established Markets: Companies with extensive customer data can build more precise and unique segmentation models.
- Highly Competitive Markets: Differentiation is key in crowded markets, and generic segments may fail to provide a competitive edge.
- Niche or Specialized Industries: Unique consumer behaviors or needs in niche markets often require customized segmentation.
Conclusion
Generic segments are a valuable starting point for market segmentation, offering simplicity, cost-effectiveness, and broad applicability. However, their broad nature can limit their effectiveness in capturing unique market dynamics and nuanced consumer needs. To maximize their impact, businesses should use generic segments as a foundation and refine them with data, industry insights, and contextual factors. This hybrid approach ensures a balance between efficiency and precision, enabling tailored strategies that resonate with target audiences.