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What is a Segment?

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Definition​

A segment is grouping customers by similar characteristics. Simply put, it's "classifying customers into groups of similar people."

Let me give you an example. Imagine you run a local chicken restaurant. If you look closely at your customers, there are several groups. Students mainly come late in the evening and order cheap sets. Family customers come on weekend evenings and order multiple servings. Office workers come on weekday lunchtimes and eat quickly. Grouping similar characteristics together is segmentation.

Why divide them like this? Because each group wants different things. Advertising "student discounts" to students, "2+1 events" to family customers, and "quick packaging" services to office workers is much more effective. It works much better than showing everyone the same advertisement.

Features​

  • Enables targeted marketing - You can send messages perfectly suited to each group's needs. Advertising tailored to each person is much more effective than showing the same ad to women in their 20s and men in their 40s
  • Spend money efficiently - You don't waste advertising budget on uninterested people, but focus only on interested ones. No need to advertise meat to vegetarians
  • Better understand customers - By dividing into segments, you can clearly see what each group wants. "Oh, female customers in their 30s value quality" - you can learn things like this
  • Set priorities - You can know which customer group is most important and spends the most money. Focusing on that group increases sales
  • Helps new product development - Knowing what each segment wants allows you to create new products tailored to them

How to Use​

Let's learn step by step how to properly utilize segments. Assume you're running an online store.

Step 1: Collect Customer Data First, you need to collect information about customers. Age, gender, location, purchase history, what they viewed on the website, when they usually visit, etc. You can see this data in Google Analytics or your store system. For offline stores, you can collect through membership registration or surveys.

Step 2: Decide Segmentation Criteria You need to decide what criteria to divide by. There are several methods. Demographics (age, gender, occupation), region (Seoul/provinces, neighborhood), behavior (frequent buyers/occasional buyers), purchase amount (VIP/regular), interests (exercise/fashion/cooking). Choose the criteria most important to your business.

Step 3: Actually Segment Divide customers into groups according to criteria. For example: Women in their 20s + living in Seoul + interested in fashion, Men in their 30-40s + with families + weekend shopping, Students + prefer cheap products + buy via mobile. Dividing into about 3-7 segments is appropriate. Too many becomes hard to manage.

Step 4: Analyze Each Segment You need to look closely at what characteristics each group has. How much does this group spend on average? How often do they buy? What products do they mainly buy? When do they mainly visit? What ads do they respond to? Analyzing these helps you better understand each group.

Step 5: Create Segment-Specific Strategies Now you need to do marketing tailored to each group. For example: Women in their 20s segment - Instagram ads, trendy images, "hot right now" message. Family segment in their 30-40s - Naver ads, family photos, "safe and trustworthy" message. Student segment - TikTok ads, fun videos, "student discount" message.

Step 6: Create Customized Content Send different messages to each segment. When sending emails, don't send the same content to everyone but content suited to each group. For VIP customers: "Exclusive preview just for special customers", For new customers: "Welcome first purchase discount".

Step 7: Recommend Products Recommend products each segment might like. Sports clothes to the group that likes exercise, kitchen items to those who like cooking. This significantly increases purchase rates. Amazon and Netflix do this well.

Step 8: Different Pricing Strategies Price sensitivity differs by segment. Students are very price-conscious, but VIP customers value quality more. So promote discount coupons to students and premium new products to VIPs.

Step 9: Measure Results Measure marketing effectiveness separately for each segment. Check which groups have high ROI and good response. Then you know where to focus more.

Step 10: Keep Updating Segments aren't fixed. As time passes and customer behavior changes, segments should change too. Re-analyze and update once every 6 months.

Examples​

Example 1: Local Cafe Sujin runs a local cafe. Initially, she did the same events for all customers but the effect wasn't great. So she divided customers into segments. Student group (3-7 PM, Americano, studying), Office worker group (7-9 AM, latte, takeout), Housewife group (10 AM-12 PM, dessert sets, chatting), Freelancer group (daytime, long stays, outlet use). She did events suited to each group. Students - study space provided + free drink refills, Office workers - 30% discount on morning sets, Housewives - cake + drink set discount, Freelancers - unlimited outlets + WiFi. Result? Sales increased by 40%.

Example 2: Online Clothing Store Minsu runs a clothing store. Analyzing customers, three segments were clear. Trendy group (20s, active on SNS, sensitive to new products, visit weekly), Practical group (30-40s, value quality, buy monthly, read many reviews), Value group (students/housewives, price-sensitive, wait for discounts). He sent different emails to each group. Trendy - "See new arrivals first", Practical - "Best reviewed products", Value - "50% off today only". He also showed different main pages based on visitors. Result? Purchase conversion rate increased 2.3x.

Example 3: Fitness Center Younghee runs a gym. She divided members into segments. Diet group (many women, prefer PT, focus on cardio), Strength group (many men, focus on weights, interested in supplements), Health group (middle-aged/elderly, careful of injuries, light exercise), Exercise enthusiast group (20-30s, early morning workouts, high intensity). She created programs suited to each group. Diet - PT + meal management, Strength - free weight classes, Health - yoga/pilates, Enthusiasts - crossfit/dawn sessions. She also sent different messages to each group. Result? PT registrations increased 60% and member retention improved.

Example 4: Education Startup Chulsoo runs an online education platform. He divided users by behavior patterns. Completers (take 90%+ of lectures, consistent), Starters (stop after 10-30%), Explorers (sample many lectures), Dormant (no access for over a month). He used different strategies for each segment. Completers - recommend next level courses + VIP benefits, Starters - "restart" push notifications + motivational emails, Explorers - suggest bundled courses based on interests, Dormant - offer "30 days free extension". Result? Lecture completion rate increased from 35% to 52%, and 20% of dormant members returned.

Pros and Cons​

Pros​

  • Much better advertising effectiveness - Doing ads tailored to each group rather than the same ad for everyone increases response rate 2-3x. Because you only show to interested people
  • Save advertising costs - Since you don't spend money on uninterested people, you can get better results with the same budget
  • Customer satisfaction increases - Customers like it when you show them exactly what they want. You give them the experience of "How do you know my mind so well?"

Cons​

  • Takes time and effort - Dividing segments, analyzing them, and creating different marketing for each takes a lot of work. It can be burdensome for small shops
  • Data is needed - Without enough customer information, you can't properly segment. Especially early startups struggle with lack of data
  • Too granular becomes complex - Dividing into 10 or 20 segments makes management too complex. Finding the right level is important

FAQ​

Q: How many segments should I divide into? A: Usually 3-7 is appropriate. Too few (1-2) is meaningless, too many (10+) is hard to manage. Small businesses start with 3-4, large companies can manage 7-10. Most importantly, each segment should have clearly different characteristics. If they're similar, no need to divide.

Q: What's the best criteria for segmenting? A: There's no right answer and it varies by business. But there are commonly used criteria. 1) Purchase behavior: how often they buy, how much they spend. This is most direct. 2) Demographics: age, gender, occupation. Most basic and easy to obtain data. 3) Interests: what they like, what products they view. Trackable if online. 4) Region: where they live. Important for offline businesses. Start with simple criteria (age, purchase frequency), and add more complex criteria as data accumulates.

Q: Should small shops also segment? A: Yes, it doesn't need to be complicated but basic segmentation helps. For example, a local restaurant dividing into "lunch office workers vs dinner families" is enough. At lunch emphasize quick service and individual menus, at dinner emphasize generous portions and family menus. It's possible even without fancy data analysis tools. Just observing customers well and writing notes is enough.

Q: Is it okay to price differently by segment? A: Need to be careful. Charging different prices for the same product can feel unfair. Instead, there are other methods. 1) Different promotions: student discounts for students, free shipping for VIPs. 2) Different products: basic products for value segment, premium products for premium segment. 3) Different packages: bundle products for family segment, small quantities for single-person segment. This way it fits each segment without feeling unfair.