Market segmentation helps you divide your broader market into smaller and more manageable groups. These groups share specific characteristics, whether it’s their age, location, lifestyle, or buying habits.
With inflation pressure, evolving buyer habits, and digital noise on the rise, reaching the right customer via a specific characteristic group is a business’s competitive edge.
Let’s take Australian business as an example. In Australia, where small and medium enterprises carry a diverse client base, segmentation is about efficiency and clarity. Done right, it supports strategic growth, sharpens campaigns, and aligns your internal operations around customers that matter.
At Nexalab, we use this kind of approach when segmenting our client markets. We tailor everything, from insights to execution, around each segment’s specific context. And we’ve built solutions like Octobits to make that smarter and easier for modern teams. The rest of this guide shows you how it’s done.
How to Segment a Market?
Conducting market segmentation means a step-by-step process, not a one-shot deal. Let’s break down how to conduct market segmentation below.
Define Your Target Market and Goals
Your target market and goals set the stage for segmentation, so define them. Define your broad target market by analysing industry trends, needs, and pain points.
For example, identify if you serve budget-conscious consumers or premium buyers. Then, set clear goals. Maybe boosting market share by 10% or increasing email open rates. This goal will guide your market grouping efforts. This kind of focus keeps your segmentation aligned with your bigger business picture.
Gather Relevant Customer Data
Then, try to gather relevant customer data because the smart market segmentation analysis thrives on those data. Think surveys, social media interactions, your sales history, and what your website analytics are telling you.
Don’t be afraid to run focus groups to get qualitative insights, too. Use tools like Google Analytics, HubSpot CRM, or Octobits for understanding the demographics and behavioural patterns. The data you get will help you know who’s already engaging and what they’re looking for from you.
Identify Meaningful Segmentation Criteria
Now, pick the characteristics that matter for your business. Common types of market segmentation look at:
- Demographics (like age and income)
- Geography (where they live)
- Psychographics (their values and lifestyle)
- Behavioural aspects (how often they buy and use).
For B2B firms, consider firmographic factors (company size, industry). The key is selecting criteria that predict different customer needs. For example, parents and students may share an age range but differ in priorities, so they should be in separate segments.
Divide Your Audience into Distinct Segments
With your criteria set, it’s time to create those distinct groups. Each market segment should be clearly defined and ideally not overlap too much with others. These segments need to be meaningful.
For instance, split customers by state or suburb if weather or local culture affects demand. Each segment should contain enough people to justify targeted marketing. But be specific enough to have common interests. Use clustering tools or spreadsheets to visualise and refine these groups.
Create Buyer Personas for Each Segment
Bring your segments to life by creating buyer personas. Give each persona a name, and flesh out their profile with key demographics, their needs, what motivates them, and their pain points. For example, you might have “Eco-Conscious Emily,” who is 35, prioritises sustainability, and seeks out ethical brands.
We also suggest bringing more detailed personas that include behaviours and buying motivators. These profiles help your team understand the customer’s perspective. Personas make it easier to craft messaging and choose channels that appeal to each group.
Tailor Marketing Strategies to Each Segment
With personas in hand, adapt your marketing to fit each group. Design product offers, messages, and channels that will best suit each market grouping. You might use vibrant TikTok campaigns for a younger and tech-savvy segment. Or perhaps a more informative email approach works for another. Develop separate value propositions and campaigns per segment. Then, launch small-scale tests of each approach. It’s all about delivering the right message to the right people through the right channels.
Test, Analyse, and Optimise
Always evaluate and refine your segmentation strategy. Use marketing automation metrics like conversion rate, open rate or sales by segment to gauge performance. Implement A/B tests on campaign messages for different segments.
Are your segments responding as you expected? Are they reachable and substantial enough? Based on what you learn, tweak your criteria or your messaging. Effective market segmentation is an ongoing process of learning and improving.
Tools to Help with Market Segmentation
Luckily, several tools can lend a hand so you don’t have to do those market segmentation techniques above manually. For example:
- Google Analytics offers demographic and interest reports to identify your current audience
- CRM and email platforms (like HubSpot, Mailchimp or Salesforce) let you tag customers and automate segment-based campaigns.
- Survey tools (Qualtrics, SurveyMonkey) collect psychographic and feedback data
- Social media analytics (Facebook Audience Insights, LinkedIn Analytics) reveal demographic breakdowns of engaged users.
- A good old Spreadsheets can be powerful for market segmentation methods when you’re starting out with clustering add-ons (e.g. Excel, PowerBI).
Now the problem is that those tools bring separate data. Each platform has its dashboard, its own logic, and its own version of truth. You end up toggling between reports, trying to make sense of numbers that don’t always line up.
It slows down decision-making, dilutes insights, and frankly, drains time you could be spending on strategy. So, the idea now is how to integrate these marketing automation tools to streamline your data processing.
That’s where Octobits acts as your central hub for segmentation. Octobits merging data from CRMs, survey tools, ad platforms, and even spreadsheets into a single, unified dashboard. No more jumping between tabs or manually stitching together reports.
How Nexalab Supports Market Segmentation?
Nexalab embeds segmentation into its core approachWhen clients come on board, we always start with one thing: market segmentation. We help group customers by real needs (location, lifestyle, etc.) and then use metrics to guide messaging. Our platform, Octobits, is designed to centralise your campaign, SaaS, and behavioural data.
And because we also support CRM integration, ETL pipelines, and campaign tracking, the journey from strategy to execution becomes seamless. We help you conduct market segmentation and make it stick. Your segments evolve. Your marketing adapts. Your outcomes improve.
Your Next Step
If you’ve made it this far, chances are you’re already thinking differently about market segmentation. And that’s a good place to be. Start reviewing your customer data. Rethink your personas. Revisit your campaigns. And if you want to scale this process with confidence, we’re here to help. We invite you to a free discussion session with our specialist. At no cost. No pushy sales. And you can use Octobits for free until the end of 2025. So, why not book a free discussion with us? Book now, here.
