4imprint, LLC

| Updated: January 06, 2021

Is your small business looking for ways to increase profits, reduce costs and effectively reach the customers most desirable to your business? If so, look no further than market segmentation. A market segmentation strategy categorizes the similarities between customers and prospects in order to customize and personalize marketing efforts. For more information on market segmentation and how to implement it within your small business, read on.

Six steps to market segmentation

Marketing author and educator Geoff Frip has developed a six-step guide to get your market segmentation initiative up and running:

Step one—define the market

Begin by clearly defining your markets. Your audience definitions should not be too broad but consist of those that may need your product or service.Imagine a party rental business—because everyone loves a party, right? But “everyone” is too broad a target market since most people will never or only rarely rent party tents, tables and chairs. Instead, the business’s market might be better defined as individuals and businesses that need to rent party and event goods with frequency, within a geographic location or at a certain price point.

Step two—identify potential segments

Segmented groups should share similarities, such as location, demographics, psychographics, occupation, interests and more.For the party rental business, the most obvious way to segment would be according to types of events—weddings, company picnics, sporting events, fairs and festivals. Other segmentation options might be based on the behavior of the customers or the profit potential of low- versus high-end events.

Step three—evaluate identified segments

Once you have identified potential segments, ensure that customers in each segment have at least one common element that binds them together, that the segments are distinctive, that they are profitable and that the customers can be communicated to effectively.

Step four—develop segment profiles

Profiles, or detailed descriptions of the segments, should specify consumer needs, brand preferences, product usage levels and price sensitivity, as well as demographic and psychographic data.

Step five—assess segment attractiveness

Once the segments are profiled, evaluate which are most attractive, feasible and economically appealing. Consider aspects, such as the competition, opportunities for growth, available resources and profitability.

Step six—select your target markets

Steps one through five should have you prepared to select one or more market segments that fit with your organizational goals and offer a good potential for growth.

Now that you’ve selected the right segments to target, make them work for you and your business with customized marketing messages aimed at motivating action. Is it price that’s most important to a segment? Consider sending a coupon or store card that extends discounted offers. Is status important to a particular audience? If so, offer special perks and benefits to “select” participants, such as a premium jacket or polo. Or, maybe safety is of top importance to a particular segment. Market your company’s safety standings and your further commitment to safety with complimentary auto safety tools or Light-Up Safety Arm Bands.

Marketing the right message to the right people may help your organization boost its bottom line. For more information on market segmentation and making it work for your small business, check out our Blue Paper.


“Market Segmentation.” 4imprint Learning Center. N.p., 31 Mar. 2015. Web. Retrieved 27 Apr. 2015.

Frip, Geoff. “A Step-by-step Guide to Segmenting a Market.” Market Segmentation Study Guide. N.p., n.d. Web. Retrieved 05 Mar. 2015.

Frip, Geoff. “Choice of Consumer Segmentation Bases.” Market Segmentation Study Guide. N.p., n.d. Web. Retrieved 05 Mar. 2015.