As market segmentation is more appropriate for consumer markets, here we have indicated the basis based on consumer markets only. Consumer markets can be segmented based on following characteristics:

1. Geographic Segmentation:

Geographic segmentation is a way of clustering of markets based on geographical variables. Such variables encompass following areas:

Geographic

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i. Region:

It indicates continent, country, state, city, village, or even neighbourhood

ii. Size of Metropolitan Area:

It indicates segmentation as per the size of population

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iii. Population Density:

It indicates number or percentage of people live in urban, suburban, or rural areas.

iv. Climate:

It indicates weather patterns in different geographic regions

2. Demographic Segmentation:

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Demographic segmentation is done based on following parameters:

i. Age

ii. Gender

iii. Family size

iv. Family lifecycle

v. Generation

vi. Income

vii. Occupation

viii. Education

ix. Ethnicity

x. Nationality

xi. Religion

xii. Social class, etc.

Some of these variables, from marketing point of view are expressed in standard categories, while some of these categories have several stages. To take an example, family life cycle can be expressed as bachelor, married (with children and without children), double income group, etc.

3. Psychographic Segmentation:

Psychographic segmentation of customers is done as per the lifestyle. Activities, interests and opinions (AIO) surveys can be used for this purpose. Some of the psychographic variables are:

i. Activities

ii. Interests

iii. Opinions

iv. Attitudes

v. Values

4. Behavioural Segmentation:

Behavioural segmentation is done based on the actual customer behaviour of the customers.

Some of the behavioural variables include:

i. Type of benefits sought

ii. Rate of usage

iii. Brand loyalty

iv. Status of user: potential, first-time, regular, etc.

v. Degree of readiness to buy

vi. Nature of occasions that stimulate purchases

Behavioural segmentation provides the advantage of using variables, which can be closely related to the product itself, and hence it could be the initial starting point of segmenting the market.