What is market segmentation? Definition, 5 types, and examples

Market segmentation is a strategic approach in product marketing that divides a total addressable market into smaller, distinct segments based on shared characteristics, such as demographics, firmographics, geography, psychographics, and behavior, allowing for targeted and personalized marketing strategies. This method enables companies to cater to specific customer needs, ensuring product profitability, efficient business models, and long-term customer retention. Examples of successful market segmentation include Apple's demographic and psychographic targeting, Slack's firmographic strategy for different business sizes, and Netflix's behavioral segmentation to tailor content recommendations. Effective market segmentation is data-driven, uses defined personas, and employs established business models to support product success, ensuring that products are tailored to meet the diverse needs of customers across various segments.