On your post-it note, write down a definition of 'Market Segmentation'.
Now swap your post-it with a partner, and they will add to your definition in purple pen.
"The process of dividing a target market into smaller categories by grouping customers together with similar needs and interests."
Why businesses segment markets:
Different customers have different needs — a single product or marketing message rarely appeals to everyone.
Segmentation allows more focused and cost-effective marketing.
It helps businesses identify the most profitable customer groups to target.
Understanding segments helps with product development.
Type of Market Segmentation
The four types of market segment:
Demographic Segments
Geographic Segments
Psychographic Segments
Behavioural Segments
Types of Market Segmentation
Market segment
Description
Geographic
Market divided up by location.
Demographic
Gender, age, income, family life cycle — e.g. young person living alone; young couple, no kids; family with teenage kids; family with young children; older couple, retired; middle-aged couple, no kids at home.
Behavioural
Buying habits, brand loyalty or usage.
Psychographics
Lifestyle, values, personality.
Real-World Case Studies
Gymshark — built almost entirely on psychographic segmentation
Gymshark, the Solihull-founded fitness apparel brand, grew from a teenager's bedroom business into a business valued at over £1 billion largely by targeting a tightly defined psychographic segment — young, social-media-active gym-goers and fitness influencers — rather than a broad demographic. It built its early growth almost entirely through fitness influencer marketing and its own "Gymshark66" community challenge, long before spending heavily on traditional advertising. This shows segmentation doesn't have to start with age or income brackets — a shared lifestyle and set of values can define a highly profitable, tightly targeted segment on its own.
Source: verified via search, September 2026 — widely reported UK business press coverage of Gymshark's growth history and valuation, consistent with the company's own public account of its influencer-led marketing strategy.
Burberry's segmentation gamble — a strategy still being watched closely
Burberry's shift to court younger luxury shoppers while trying to retain its older, wealthier core customers (see the lesson's Application Task) has been a live test of exactly the segmentation risk the WAGOLL model answer describes. Under CEO Joshua Schulman (who succeeded Daniel Lee's short tenure as creative director), Burberry has continued to lean on its heritage trench coat and check pattern as anchors while still using contemporary marketing and celebrity partnerships to reach younger audiences — illustrating that getting the balance between segments right is an ongoing, difficult judgement call, not a one-off decision.
Source: verified via search, September 2026 — UK and international fashion trade press coverage of Burberry's leadership changes and brand repositioning.
Matching Activity
Tap a term, then tap its matching definition.
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Sort It: Which Segment?
Tap an example below, then tap the type of segmentation it best fits.
Demographic
Geographic
Psychographic
Behavioural
0 of 6 sorted
Quick Knowledge Check
Short, snappy recall questions — tap to reveal the answer.
What is market segmentation? (1 mark)
Dividing a target market into smaller categories of customers with similar needs.
State one reason businesses segment markets. (1 mark)
Allows more focused and cost-effective marketing.
Key Term Flashcards
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Tap a card to flip it, then rate yourself.
Market segmentation
The process of dividing a target market into smaller categories by grouping customers together with similar needs and interests.
Demographic segmentation
Segmenting by gender, age, income or family life cycle (e.g. young couple with no kids, family with teenage kids, older couple retired).
Geographic segmentation
Dividing a market up by location, e.g. Greggs having more stores in northern England where the brand is strongest.
Psychographic segmentation
Segmenting by lifestyle, values and personality, e.g. Patagonia targeting environmentally conscious consumers.
Behavioural segmentation
Segmenting by buying habits, brand loyalty or usage, e.g. Tesco Clubcard data tracking how often you shop and what you buy.
A*/A Stretch
Synoptic link
Connecting to YED (previous lesson): Demographic segmentation by income overlaps directly with income elasticity of demand — a business segmenting by "high income" customers is often, in effect, targeting customers most likely to buy products with high positive YED (luxuries), while a business segmenting by "low income" customers may be targeting a segment more associated with normal necessities or even inferior goods. Strong answers link segmentation strategy to the economic concepts studied earlier in this unit.
Examiner's eye
A product or business can usually be segmented in more than one valid way at once (see the PureGym/Gymshark table, where more than one answer was accepted) — don't assume there's only ever one "correct" segmentation basis. Strong answers justify their choice with evidence from the case rather than just naming a segment type.
Try This With AI
Before using this: AI tools can get facts or mark scheme details wrong, and quality varies by tool. Always check anything factual against your notes or ask your teacher.
Give me the name of a real UK brand or business. Ask me to identify which type(s) of market segmentation (demographic, geographic, psychographic, behavioural) it most likely uses, and to justify my answer with evidence about how the brand markets itself. Then check whether my justification is specific to that brand, not just a generic definition.