Four segmentation methods and when to use them in marketing

Marketing without segmentation is a lot like shouting into a crowded room and hoping the right person hears you. Without a clear way to communicate in a noisy marketing environment, your message gets lost in the mix.

With segmentation, you can identify your target audience, speak to their needs, and deliver the right message at the right moment. Companies that use segmentation are 130% more likely to understand customer motivations, resulting in more effective campaigns and deeper audience relationships.

In this article, we’ll break down four of the most effective customer segmentation methods, when to use each, and how Experian’s audience solutions can help.

What is segmentation in marketing?

Segmentation is the process of splitting a large audience into smaller groups that share similar traits, like demographics, location, behavior, or firmographic characteristics. As a marketer, these segments enable you to choose channels, messaging, and offers that resonate with each group.

Whether you’re targeting new homeowners in Texas, loyalty shoppers in retail, or small business decision-makers in finance, segmentation helps you stand out to them and get results.

Why should marketers segment their audiences?

Effective audience segmentation fuels accuracy, performance, and personalization at scale. Here’s why you should invest your time and marketing budget in honing your audience segments.

Maximize your marketing ROI

Nobody wants to waste money talking to the wrong crowd. Using various methods of segmentation, you can focus on those who want to hear from you — and the payoff can be huge. For marketing channels like email, segmentation can drive up to 760% more revenue than non-segmented campaigns. The more targeted your message, the better the return.

Create a unified omnichannel strategy

Segmentation helps ensure that every channel, from email and social media to display, SMS, and direct mail, operates from the same playbook.

Once you define your target audience segments, you also need a trusted identity partner to sync them across platforms and environments. This ensures you can deliver consistent, personalized experiences at every touchpoint and your audience receives the same message in the proper context, regardless of where they engage.

Strengthen customer loyalty

Roughly 75% of consumers are loyal to brands that “get” them. When you strive to understand your customers, they’re more likely to stay. Segmentation enables you to personalize communications based on your target segment’s values, behaviors, or preferences, encouraging repeat business.

Expand into new markets

With segmentation, you can analyze existing customers to identify common traits and use that data to pinpoint similar groups in new regions or markets. For example, if your top customers are middle-class parents in suburban areas, you can target lookalike segments in other cities with tailored messaging.

This makes it easier to expand with confidence, knowing you’re reaching people who are more likely to convert.

Lower customer acquisition costs

Rather than forcing you to cast a wide net, segmentation enables you to focus your budget on high-potential audiences across channels, reduce acquisition costs, and minimize wasted spend on low-intent audiences.

Four segmentation methods and examples

Let’s look at four different methods of market segmentation. We’ll define each, share when to use them, and give real-world examples to help you apply them.

1. Demographic segmentation

Demographic segmentation breaks your audience into groups based on gender, income, age, education, marital status, occupation, and household size. It’s one of the most foundational segmentation methods because it’s easy to implement and often tied directly to buying behavior.

Demographic data makes it easier to get the tone, offer, and channel right from the start. And when you combine demographic segmentation with other segmentation methods, such as behavior or location, the impact multiplies.

When to use it

Use demographic segmentation when your product or service is clearly more relevant to people in a specific life stage, income bracket, or household type.

Among all methods of market segmentation, demographic data is often the easiest starting point. It’s especially effective for industries such as financial services, healthcare, education, retail, and others, where consumer needs change based on demographics.

Examples

As a real-world example, a health supplement company used Experian data to segment its ambassador program audience into four demographic groups based on lifestyle and household makeup. These included younger singles, value-seeking families, high-income spenders, and older empty nesters.

Applying these insights at registration allowed the brand to deliver personalized, channel-specific communications that boosted acquisition and retention. The approach led to stronger engagement and more meaningful customer connections.

2. Geographic segmentation

This method of market segmentation categorizes people by location, including country, region, state, city, zip code, or even climate. It’s a simple yet effective way to tailor your marketing, as location often influences everything from lifestyle and language to shopping habits and product needs. It’s most often used among brands with physical locations or region-specific campaigns.

Whether you’re promoting snow boots in Colorado or sunscreen in California, geographic segmentation helps you stay relevant to the local context.

When to use it

Geographic segmentation is ideal when your offer or message changes depending on climate, culture, availability, or local regulations. It’s also helpful for planning market expansion or testing the performance of different methods of market segmentation across regions.

Examples

One home furnishings retailer partnered with Experian to understand how customer needs varied across store locations. Using a mix of client data and Experian demographics, we segmented stores based on their surrounding customer base, like urban, white-collar shoppers in metro centers versus lower-income households in more remote cities.

These insights enabled the retailer to tailor inventory, marketing strategies, and ad copy for each store type, resulting in more relevant customer experiences.

3. Behavioral segmentation

Behavioral segmentation centers on how people live their lives — their interests, habits, and decision-making patterns. It includes factors like past purchases, engagement frequency, brand loyalty, product usage, browsing patterns, and responsiveness to offers or promotions.

Among all of the segmentation methods, this one provides insight into intent, helping you go beyond who your audience is to understand what they do. You can use behavioral insights to re-engage former customers with relevant offers, reward loyal buyers with personalized perks, or guide high-intent shoppers toward conversion with timely nudges.

When to use it

Behavioral segmentation is best when you want to personalize based on intent, habits, or engagement stage. It’s particularly useful for retention, reactivation, or cross-selling strategies.

Examples

In practice, a national big-box retailer partnered with Experian to better understand customer behavior during grocery store visits. The goal was to identify distinct “trip missions” that could drive category trial and increase basket size. We analyzed everything from basket contents to customer composition and segmented visits into 11 unique missions.

For example, the “All Aisles Online” segment represented large households (often homeowners with families) stocking up on household staples through online orders. In contrast, the “Marketable Mission” segment captured smaller, likely renter households making quick trips for non-essentials.

These behavioral insights empowered the retailer to adjust promotions based on the intent behind each visit, strengthen customer relationships, and drive growth.

4. Firmographic segmentation (B2B)

Firmographic segmentation is like demographic segmentation for businesses. It groups B2B audiences based on attributes such as annual revenue, location, company size, industry, and organizational structure. You can also segment by job title or decision-maker role to better target key stakeholders.

This method is great for aligning your messaging, sales strategy, or product offerings with the unique needs of various business types. A startup in the tech sector will likely respond to a very different pitch than an enterprise manufacturer, and firmographic data helps you speak to both with precision.

When to use it

Use firmographic segmentation when marketing to other businesses, especially when your product or service has different benefits depending on business size or sector.

Examples

Recently, a B2B client partnered with Experian to gain a deeper understanding of the revenue potential of their existing business customers. Using firmographic data, we segmented the client’s customers into distinct groups based on the characteristics most strongly tied to spending behavior.

For each segment, we calculated potential spend, defined as the 80th percentile of annual spend within that segment. This allowed the client to identify high-value accounts with untapped growth potential.

For example, one customer, ABC Construction, had spent $4,750. But based on their segment’s profile, their annual potential was $9,000. That insight revealed a $4,250 opportunity to deepen the relationship through more targeted marketing and sales efforts.

Best practices for market segmentation

Regardless of the segmentation method you use, the following best practices will help you maximize the benefits of your efforts.

Start with clean, reliable data

Segments are only as good as the data behind them. If your data is outdated, inaccurate, or incomplete, your segments will result in ineffective targeting and a wasted budget. Utilize accurate, compliant, up-to-date sources like Experian Marketing Data, ranked #1 in accuracy by Truthset, to ensure your targeting is on point.

Test and refine segments continuously

Business goals, market conditions, and behaviors are constantly changing. What worked last month or even last week might not work today. By adjusting your segments over time, you make sure your marketing stays relevant, focused, and effective. Use A/B testing, performance metrics, and audience analytics to iterate on your segments and improve results over time.

Align segments with personalized messaging and offers

Each segment has distinct needs, preferences, and motivations, which means generic messaging won’t resonate effectively. Once you’ve built your segments, personalize your creative, copy, and offers to appeal to each group and increase the likelihood of engagement and conversions.

Integrate segmentation across all platforms

If someone sees one message in an email and a completely different one in an ad or on your website, it creates confusion and weakens trust. From CRMs and email platforms to ad tech and analytics tools, make sure your segmentation method is applied consistently across every channel to improve performance and build a cohesive brand experience.

Segment your audiences with Experian

Effective audience segmentation is at the heart of every successful marketing strategy, but in this fragmented, privacy-conscious landscape, grouping your audience into meaningful, actionable subgroups is more challenging than ever. That’s where we come in.

With coverage of the entire U.S. population, Experian helps marketers define and categorize broad audiences into precise segments using rich data on demographics, behaviors, financial profiles, and lifestyle traits. These insights make it easier to personalize messaging, optimize media spend, and drive better outcomes.

From ready-to-use syndicated audiences to custom segments and even Contextually-Indexed Audiences that align targeting with content, Experian offers flexible segmentation solutions that perform across digital, TV, programmatic, and social channels.

In our most recent release, we introduced over 750 new and updated audience segments across key categories, including a brand-new category for Experian, giving marketers more accurate, behavior-based targeting options than ever before.

• 135+ new CPG audiences, a brand-new category for Experian, built from opt-in loyalty card and receipt scan data
• 240+ new automotive audiences covering ownership and in-market shoppers
• 100+ new high-spending behavior audiences focused on specific merchant categories
• 24 new wealth and income segments with refined household net worth tiers
• 13 new lifestyle-based housing audiences for family- and household-focused targeting
• 250+ refreshed financial segments with improved naming conventions for better discoverability and clarity

Together, these segments give marketers more accuracy to reach high-intent consumers based on real-world behaviors, spending patterns, and financial capacity.

Audience solutions powered by consumer insights

Experian Marketing Data, one of the most comprehensive and accurate consumer databases in the U.S., is the core of our segmentation capabilities. Backed by over 5,000 demographic and behavioral attributes, it helps you understand not just who your customers are but how they live, shop, spend, and engage, too.

Each audience segment is built with privacy and precision in mind, using a blend of demographic data, financial behaviors, lifestyle signals, and media habits. With these consumer insights, we’ll help you uncover meaningful patterns that lead to smarter strategy.

Experian’s pre-built audiences

Our syndicated audiences are pre-built, ready-to-activate segments based on shared characteristics from age and income to purchase behavior and lifestyle indicators. When speed and scale are a priority, these segments offer a fast, effective way to reach your target audience.

Experian’s 2,400+ syndicated audiences are available directly on over 30 leading television, social, and programmatic advertising platforms, as well as within Audigent for activation within private marketplaces (PMPs).

Here’s what’s new from our August 2025 release:

• CPG shoppers by category (e.g., Frozen Food Shoppers, Multi-Vitamin Shoppers)
• Luxury EV owners and auto brand shoppers (e.g., Rivian, Polestar, Cadillac)
• High spenders in specific categories (e.g., men’s grooming and women’s accessories)
• Ultra high-net-worth households (e.g., Net Worth $50M+) and likely home sellers
• Young Family Homeowners and Growing Family Apartment Renters

Custom audiences for specialized targeting

Need a custom audience? Reach out to our audience team, and we can help you build and activate an Experian audience on your preferred platform. Additionally, work with Experian’s network of data providers to build audiences and send to an Audigent PMP for activation.

Contextually-Indexed Audiences

Experian’s Contextually-Indexed Audiences offer a privacy-safe way to reach relevant consumers in the moments that matter without relying on identity signals or third-party cookies. These segments combine Experian’s consumer insights with page-level content signals, enabling you to align targeting with intent and mindset, even in cookieless or ID-constrained environments.

Want to take your segmentation strategy to the next level? Let’s talk. We’ll help you define your audience in ways that drive real results.