Customer segmentation is the process of categorizing a company's customers into groups based on common characteristics. This enables companies to effectively and appropriately tailor their marketing efforts to each group.

There are four primary types of customer segmentation:

1. Demographic segmentation: This method involves dividing customers into groups based on shared characteristics such as age, gender, income, occupation, education level, marital status, and location.

2. Psychographic segmentation: In this approach, customers are grouped based on their lifestyle, interests, values, and attitudes.

3. Behavioral segmentation: This method classifies customers into different groups based on their purchase history, usage patterns, brand loyalty, and responses to marketing campaigns.

4. Geographic segmentation: Here, customers are divided into groups based on their location, which can include country, region, city, or neighborhood.

Customer segmentation offers various benefits, including optimizing your marketing strategy and defining specific marketing channels that target each segment. It also helps identify ways to improve products tailored to specific segments and even test various pricing options.

Segmentation can be carried out in various ways, such as through surveys, cold calls, collecting membership data, insights from customer support interactions, purchase history analysis, online analytics, and machine learning.

Here are some application examples:

• Implementing different pricing strategies for students.
• Offering family discounts.
• Conducting age and gender-specific marketing campaigns (Netflix serves as a great example).
• Developing distinct products for various cultural groups.
• Sending customized messages based on how customers discovered a service.