Market segmentation is one of the issues that receive a lot of attention today. This is considered an important task to help businesses succeed in finding potential customers and retaining old customers. So what is market segmentation and how can it be determined exactly? Please follow the information below to understand more about it.

What is market segmentation? Benefits of market segmentation for businesses

Why do businesses need to divide the business market?
Why do businesses need to do business market segmentation?

Find out what is market segmentation?

Although the term market segmentation is commonly used in business and marketing. But not everyone understands what market segmentation is. In fact, this is dividing the market into many different segments based on specific criteria to be able to reach customers more easily.

Accordingly, businesses will gather customers with common needs and perceptions about products/services into a group. Thereby allowing businesses to target the right target to experience the best product/service quality.

A market segment is best evaluated when it scores the following:

  • It is possible to measure the quantity and evaluate the purchasing ability of this customer group.
  • The market segment must be large enough for the business to get maximum profit from it.
  • That market segment needs to be stable over the long term, not a virtual metric, and could drop unexpectedly.
  • Businesses can reach these target groups through marketing strategies or marketing methods.
  • That market segment must match the trend and be consistent with the products/services that the business is trading.

What are the benefits businesses get from market segmentation?

It can be affirmed that market segmentation plays an extremely important role in the development of businesses. Because, it brings a lot of benefits that you may not notice such as:

Define your target customers and better understand them 

Market segmentation is considered a tool to identify target customer groups for businesses. From there, businesses can come up with a suitable marketing strategy to be able to effectively promote their products/services to potential customers. At the same time, it helps to minimize the cost of advertising for customers.

What are the benefits of market segmentation for each business?
What are the benefits of market segmentation for each business?

In addition, market segmentation helps businesses make the most of their marketing methods. With the right advertising messages, businesses will increase the conversion rate when advertising, increasing revenue quickly. In particular, market segmentation will help affirm the brand and firmly connect with customers if businesses know how to use it effectively.

Increase conversion rate when advertising for business

The success of the business is directly determined by the conversion rate when advertising. Through market segmentation, businesses will have more information about customers.

This helps businesses understand customers well to bring useful information to them, creating satisfaction about products/services. Potential customers will love and choose the products/services provided by the business, increasing the conversion rate.

Help businesses have a better competitive advantage in the market

When it comes to the benefits businesses get from Market Segmentation, it is impossible to ignore competitive advantage. The fact that you better understand the market you are targeting through market segmentation will help you focus appropriate resources, increasing your competitiveness.

Enterprises will offer the values that the market needs in terms of products/services, meeting all the requirements of customers. With this advantage, the business will surely succeed in the race in the market.

What is market expansion through market segmentation?

When you want to expand your business market, market segmentation is a useful tool you cannot ignore. You can expand your customer base, expand your market share, or find new potential customer niches for your business.

When you find new markets, the revenue and profit from it will be huge. In particular, small and medium enterprises should find these niche markets to develop firmly and effectively.

Segmentation based on what criteria is effective?
Segmentation based on what criteria is effective?

Retain old customers better by segmenting the market

Usually, customers who have used your product/service will not buy again if you don’t take care of your customers effectively. Therefore, the market segmentation will help you understand how to communicate and take care of customers effectively.

What are the ways to effectively define market segments?

The rapid development of goods/services business has created high competition for businesses. Therefore, to be able to survive, develop and succeed, businesses need to divide the market in the following ways:

Determine the exact target market that the business is targeting

Market research, customer research is the way for you to know your market. At the same time, through that, it is also clear how the product / service of your business is in the market.

Enterprises also need to determine whether the market they are targeting is monopolistic or not. What are the goods/services that the business is providing, and how is the competitiveness. From there, adjust the business strategy so that it is most effective.

Evaluate the selected business market and understand it

Based on certain criteria, businesses will find out their potential market segments. You need to understand this market well and make the most objective assessment about it. From there, consider competitors, market size and other factors related to customers.

Do established businesses need market segmentation?
Do established businesses need market segmentation?

Clearly define what your business’s target customers are</span >

You must determine what is the market segment you are targeting? Who are your target customers in your target market? From there, you can group customers into a group that matches your criteria.

What are the criteria for market segmentation?

Currently, there are many criteria chosen by businesses to divide the market into small groups. In which the following criteria are most often selected:

Geographic criteria in market segment

Businesses will be based on regions, population density, climate, … to divide the market. Understanding and grasping the customs, practices or characteristics of each region will help businesses determine the most appropriate sales approach and location. Besides, businesses can also manage marketing activities more easily by region.

Segmentation based on demographic criteria

It can be affirmed that this is the criterion applied by most businesses to divide the market. Based on demographic factors such as family, gender, age, occupation, income, … to divide the market.

This criterion is simple but very effective because consumer behavior as well as customer preferences will be associated with demographic factors. Moreover, these factors are easy to measure, helping businesses determine more accurately.

Separate the market based on behavioral criteria 

Based on attitudes, understanding as well as how to use products, businesses can divide the market into many groups. This is the potential segment with the highest conversion rate, so businesses need to understand customer behavior to build an effective segment.

What is the reason businesses need to do market segmentation?
Why do businesses need to do market segmentation?

Hopefully, the above sharing will help you better understand what market segment is? If you still have questions about this, please visit