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For a long time, marketing experts have segmented their targeted consumers in order to understand who might likely purchase a product or a service. In order to grow efficiently, developing companies, need to focus on a specific subgroup of customers instead of getting abstracted with a scattered universe of potential customers. And, the latchkey for that is market segmentation.

Market segmentation or customer segmentation can be defined as the process of assessing and classifying customer groups to facilitate targeted marketing. In simple words, market segmentation is a process of dividing the large set of the audience into various small groups based on different categories such as lifestyle, demographics, as well as physiographic behavior. Ecommerce businesses of all sizes are subject to market segmentation for better consumer understanding and customer satisfaction.

There are quite a few reasons why the majority of ecommerce store owners fail in targeting their customers. However, one of the major causes is inadequate segmentation of their existing customers. Most of the online sellers think that bulk marketing suffices for increased sales as well as customers. However, that is a pretty costly, unproductive, and time-consuming approach for dealing with a large set of audience at a time. Therefore, in this blog, we will be discussing everything regarding the importance of market segmentation/ customer segmentation in your ecommerce business. If you are into the ecommerce market, looking for growth, then this one is specially penned for you!

Basic Factors of Market Segmentation

Basic Factors of Market Segmentation

Online customers today are truly dedicated to quick purchases than ever before. And, to provide the customers with what they want, stands as the biggest challenge of the marketers in the ecommerce business. As a marketer, you have to be in the shoes of a customer, think like them, and even behave like them before venturing into marketing the ecommerce products or business. By doing so, you and your customers can be on the same page throughout the process. Various data mining techniques can be employed to segment customers. However, some of the basic factors of market segmentation can be of great help. Usually, market segmentation can be done under four categories, they are:


You can categorize your customer base, depending on their geographical locations, such as their country, state, city, region, etc. You can also categorize your customers based on the number of population, climate, urban, suburban, etc. For instance, if the seasonal changes are different in different locations, you can provide for the different requirements of geographically separated potential customers.


This categorization refers to the one that classifies the customers based on their demographic variables including their nationality, age, gender, occupation, income, size of the family, etc. For instance, if you are offering wheelchairs for the elders, you would be categorizing your customers based on their age which could be 60 years and above.


Herein, you can classify your customers based on their personality traits, lifestyles, values, interests, etc. For instance, classifying the customers based on their shopping habits, interests, priorities, hobbies, and so on can be considered under this segmentation.


This kind of segmentation implies grouping aggregate buyers in the online store into similar groups based on their mutual behavioral patterns in shopping online. For instance, in festive seasons, people often tend to buy sweets. Therefore, all the customers wanting to purchase sweets can be categorized into one group.

How does the process work?

How does the process work

Market or customer segmentation is a process that needs to be executed effectively. And, to be effective, you must consider using systematic, scientific, and smart processes for data collection and analysis. Below are a few pointers to give you a fair idea of how this entire process must function:

  1. Based on the customer requirements, past activities, and demographic profiles, the store data must be classified into relevant and quantitative segments.
  2. The impact of spending on each segment and the revenue must be analyzed in order to understand and learn the profit potential of each segment.
  3. Next, you must focus on targeting customers based on their profit potential as well as the company’s potential to solely serve each segment.
  4. You must invest in tailoring your products or services for effective marketing and distribution in order to satisfy the needs of each customer segment.
  5. Analyze and rank each segment’s performance and enhance the segmentation strategy with time, based on the changing market requirements, trends, and customer needs.

Importance of market segmentation in ecommerce business

Importance of market segmentation in ecommerce business

Without effective market segmentation, the ecommerce business owners can only hope for potential customers to resonate with their marketing efforts. Untargeted marketing assumption could be quite easy and quick. However, let us tell you, the results are not even close to what you get from targeted marketing efforts. With market segmentation, you shall be able to shape your marketing campaigns to grab the attention of specific customer groups. Here are a few reasons, why we think, customer segmentation would be irreplaceably important for your ecommerce business:

Know the Right Direction to Follow

The segmentation of the market is considered to be a crucial tool for identifying customer segments that are inclusive of targeted customers. Therefore, market segmentation can help you know the right direction that you need to follow in order to execute a feasible, relevant, and viable marketing strategy.

Add Customers to your Store

Market segmentation can aid you in adding an entirely new customer group who are interested in your products. For this, you can consider partnering with influencers who can bring a targeted audience of a particular segment to your store. For instance, asking a fashion influencer to market your newly launched garment brand can bring attention and sales from the right set of audiences.

Get a Competitive Edge

As market segmentation is known to facilitate the identification of specified customer groups, their requirements, needs, behavior, etc. it shall help you provide your customers with exactly what they are looking for. Consequently, you can better satisfy the requirements and needs of your target audience, while gaining a competitive advantage over the rest of the market.

Add Value to your Business

With the right implementation of market segmentation, you shall be able to develop a better understanding of the dynamics of comparatively smaller market segments inclusive of your targeted customers as well as that of larger market segments as a whole. This will help you make well-informed smart decisions for servicing your customers, the right way. By knowing the interests and requirements of your customers, you can project the required products or services for the concerned group, adding value to the consumer base of your ecommerce business.


If you know the right way to implement and execute the strategies, you would surely reap the benefits of market segmentation in your ecommerce business. Having partial knowledge of not only this but anything relevant can be quite hazardous. If done right, with market segmentation, you can bring a large number of customers back to your store, upgrade your position in the competitive ecommerce market, establish brand identity, build long-lasting customer relationships, and execute effective targeting of your customers.

Whether you are running a small-scale, medium-scale, or large-scale ecommerce business, understanding your customers is your ultimate key to success. Customer segmentation shall help you learn more about a particular set of customers within your already existing customer base. Remember, your entire business plan relies on your target audience. Therefore, be sure to segment your market smartly and carefully.

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