Every major market can be described as segmented into a number of parts. They can be based on the various characteristics of the customers, such as age, sex and education. They can also be based on the geographical and other characteristics of the markets. The common methods of market segmentation are geographic segmentation, demographic segmentation, psychographic segmentation, buyer behavior segmentation, and volume segmentation.

Segmentation based on region, continent, country and climate of the area comes under geographic segmentation. Segmentation based on age of the customer group, sex, family size, language, income level comes under demographic segmentation. Variables such as personality types, lifestyles and value systems form the basis of psychographic segmentation. Buyer behavior segmentation is similar to but slightly different from psychographic segmentation. The primary idea in buyer behavior segmentation is that different customer groups expect different benefits from the same product and as such their motivations in owning it and their behavior in buying it will be different. In volume segmentation, the quantity of purchase or the potential quantity of purchase is the base for segmentation. There may be bulk buyers and small-scale buyers, regular buyers and one-time buyers. They have to be treated differently.

Whatever be the parameters/ bases of segmentation, the segmentation task is an exacting one. Mere identification of a difference between one customer group and another does not complete market segmentation. In fact, the identification of differences is just the starting point of the whole process. Many other steps have to be carried out for completing the exercise.

It involves assessing the difference between one customer group and the other in terms of their needs and their likely responses to the product and other marketing inputs of the firm. Find out by what descriptive characteristics can consumers of a particular disposition is tagged on to a specified segment. Analyze and establish whether it is desirable and possible to formulate separate marketing programs and marketing mixes for the different segments.

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