Segmentation
The practice of dividing a market into groups that share buying behavior, needs, or willingness to pay. Useful segmentation produces groups large enough to matter and homogeneous enough to act on differently.
Segmentation divides a market into subsets that share enough characteristics to deserve distinct positioning, pricing, or product strategy. Without segmentation, marketing speaks to no one and product builds for no one; with too much, the team loses focus.
Four common bases for segmentation
- Firmographic / demographic: industry, size, geography, age, role — easy to gather, often weakly predictive
- Behavioral: how they currently solve the problem, what they've previously bought, usage patterns — usually the most actionable
- Psychographic / values: brand preferences, attitudes — useful for consumer brands, less for B2B
- Needs-based / JTBD: the progress they're trying to make — strongest predictor of which feature matters
Best-in-class teams segment by combinations — e.g., "mid-market SaaS that already uses HubSpot and is hiring its first VP RevOps" combines firmographic, technographic, and behavioral signals into a sharp segment.
What makes a useful segment
Four tests:
- Distinct: the segment behaves differently from adjacent ones — different buying signals, pain, willingness to pay
- Reachable: you can identify and contact members through a defined channel
- Substantial: large enough to matter to the business
- Actionable: your team can do something differently for this segment (positioning, pricing, product) — otherwise the segmentation is just a labelling exercise
Failing any one test makes the segment unusable in practice, even if it's intellectually interesting.
Related
- ICP — the sharpest segment in a B2B sales pipeline
- Positioning — what you do once segments are defined
- JTBD framework — needs-based segmentation in detail
See also
- GlossaryICP
- GlossaryPositioning
- AcademyJTBD framework, explained