Business Studies Market Segmentation – Identifying Your Target Customer

In business, not every product suits every person. Market segmentation helps companies divide a broad market into smaller groups with shared characteristics so they can focus their marketing, design, and pricing more effectively. Understanding segmentation gives students insight into why products, adverts, and messages look so different even within the same industry.

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The Concept

Market segmentation means dividing customers into categories that share similar traits or needs.
The four main types are:

1. Demographic: age, gender, income, education

2. Geographic: location, climate, region

3. Psychographic: attitudes, interests, lifestyles

4. Behavioural: spending habits, brand loyalty, product use

By analysing these segments, businesses can tailor their approach — from the design of a product to the tone of its advertising.

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The Example

A sportswear company might use:

• Demographic segmentation to target 16–25-year-olds,

• Psychographic segmentation to focus on active lifestyles, and

• Behavioural segmentation to reward loyal customers through fitness apps and discounts.

Students can apply the same logic to real-world case studies such as phone contracts, fashion brands, or subscription services.

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Skills Highlight

• Identifying target markets using segmentation data

• Linking consumer characteristics to product design and pricing

• Analysing how marketing messages vary between customer groups

• Understanding the balance between niche and mass marketing

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Why It Works in Teaching

Segmentation connects theory to everyday experience. Students quickly see that every advert or product choice is deliberate — based on data and psychology rather than guesswork. It develops analytical and commercial thinking, key skills for business and marketing studies.