Customer segmentation is the process of dividing customers into distinct, meaningful, and homogeneous subgroups based on various attributes and characteristics.
It is used as a differentiation strategic marketing tool. It enables organizations to understand the customers and build differentiated strategies, tailored to their characteristics.
There are various segmentation types according to the specific segmentation criteria used. Specifically, customers can be segmented according to their value, sociodemographical and life stage information, behavioral, needs/attitudinal, and loyalty characteristics. The type of segmentation to be used depends on the specific business objective. The following types of segmentation are widely used in consumer markets (Source: Tsiptsis and Chorianopoulos (2009). Reproduced with permission from Wiley).