Segmentation is a key diagnostic step in the marketing process, and a surprisingly simple one. Yet it still strikes fear into the heart of marketers who don’t fully understand it.
Many a marketing department has been guilty of commissioning a segmentation study to check it off their list, only to then hide it away in a folder to gather dust.
But the point of segmentation is simple: to help organisations decide where to compete (and where not to).
Done well and with proper input from the marketing team and wider business, it creates a clear picture of the market. We can see which segments exist, how big they are, what they’re worth, and where the most attractive opportunities sit.
And yes, even if you ultimately choose a broad, mass-market approach, segmentation still matters. Market segmentation is about understanding the total market. If you can’t define who the mass market is, you’re not making strategic choices. You’re just guessing.
Before you slice (or don’t slice) the pie, you need to understand what the pie looks like.
What is market segmentation (strategically)?
Segmentation is the process of dividing the total market into groups of customers with similar needs, behaviours, or attitudes.
For each of those groups, we want to work out the size of each segment, the value opportunity, and our brand’s existing market share. This helps us decide which group or groups we want to target and, later, position our brand to.
As a new or smaller business, segmentation can help you find a niche group to target and gain a foothold in the market. While for bigger brands, it ensures you have correctly defined and locked onto the right target segment with the biggest commercial opportunity.
But segmentation is also a critical tool for brands taking a mass marketing approach, or ‘sophisticated mass marketing.’ In mass marketing, segmentation identifies your total market. A nappy or diaper brand’s total potential market isn’t just “everyone.” Category leader Pampers, for example, defines their market as “diapering households.”
That might sound like a superficial step, but defining your total potential market is an important strategic choice that allows us to move forward into strategy. It can impact what we do later on and enables us to focus resources most effectively.
And within that total market, we might still want to understand if there are distinct groups that we can target later down the funnel with performance, ‘buy now’ messaging.
For most brands, segmentation ultimately comes down to the search for a “happy medium”: a group of customers who are similar enough in needs that you can serve them successfully, but big enough to give you the scale economies to be profitable.
The goal of segmentation is focus, not complexity. We only want to segment the market based on top-level criteria that matters to our business. Detailed customer personas and segment portraits can come later.
The Meaningful x Actionable framework: a practical approach to market segmentation
There are plenty of ways to achieve market segmentation. There’s demographics and firmographics, psychographics and behavioural data. You can do it internally, work with a research agency (or you can palm it off entirely and hope something useful comes back).
But when segmentation fails in a business, it usually comes down to one of two reasons:
Either it’s meaningful but unactionable: built around deep needs or attitudes you can’t reliably identify at scale.
Or it’s actionable but meaningless: based on variables that are easy to measure, but don’t change what customers want or how they buy.
The Meaningful x Actionable framework solves this. Mark Ritson has been using this approach for more than 20 years with hundreds of B2B and B2C clients, “and it never lets me down.”
It’s a simple framework for stress-testing segmentation variables before you build your segments. The aim is not to create the cleverest segmentation, but to create one you can actually use.
Step 1 – Variables: what customer differences are we looking for?
Start with a long list of customer variables. You should be broad here, thinking about all the different ways you might later want to segment your market.
Bring in the sales team and any other relevant teams to get a good selection of variables that matter to (and across) the business.
We are looking for customer differences that might plausibly affect needs, buying behaviour or value.
For example, if you were building a segmentation for MiniMBA individual learners (a B2C segmentation), your variable list might include:
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Job title / seniority
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Years of experience
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Industry
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Employer size
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Has a marketing qualification already?
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Generalist vs specialist role
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Paying personally vs company-funded
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Motivation: promotion / career switch / confidence / credibility
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Price sensitivity
But if you were segmenting the organisations that fund MiniMBA team training (a B2B segmentation), you might look for:
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Marketing quality
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Marketing importance
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Annual revenues
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Company size
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Is there a CMO in place?
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Marketing Excellence team?
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Ad spend in $
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Sales query or interaction?
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Existing relationship with MiniMBA
Step 2 – Meaningful: does it reflect real differences?
Score the meaningfulness of each variable on a scale of 1 to 10. A segmentation variable is meaningful if it captures genuine differences in needs, behaviours or value.
Remember, segmentation isn’t about describing customers. It’s about predicting how different groups will behave, and what that means for strategy.
Mark Ritson suggests the following as a rough temperature gauge:
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1 = irrelevant
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5 = has some impact, but isn’t a strong influence
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10 = directly influences how customers behave and the decisions they make
Step 3 – Actionable: can you identify and measure it?
Now, score how actionable each variable is on a scale of 1 to 10.
Actionability is about practicability. For example, “ethical buyers” might be a highly meaningful difference, but unless you can reliably identify and reach them at scale, it won’t help you build a usable segmentation.
- 1 = you will never be able to get this data
- 10 = you already have it
- 5 = you could estimate it
It’s important to be honest, not optimistic here. If you can’t find the segment in the real world, you can’t target or ultimately serve it.
Step 4 – Tally and prioritise
For each variable, multiply the meaningful score and actionable score to get a total score out of 100.
For example, if ‘company size’ scores 7 on Meaningful and 10 on Actionable, that gives you a final score of 70.
Once you’ve totted up your final scores, that long list of possibilities becomes a shortlist of high-scoring, functional segmentation variables that you can take forward into your market segmentation.
From here, you’ll be able to build what Mark Ritson calls the Meaningful x Actionable Grid, a simple matrix that turns those variables into actual, usable segments.
On the MiniMBA in Marketing, you’ll get the full Meaningful x Actionable Grid template and a walkthrough of how to apply it in practice.
You’ll discover how to use your strongest variables to create market segments, how and when to merge functionally similar groups, and how to populate each segment with the data that turns an interesting picture into a strategic tool.
What you’re left with is a usable map of the market, not to be admired or whipped out for presentations, but to plot your strategic route forward.
B2C and B2B segmentation: same principles, different execution
Whether you’re selling to consumers or organisations, the principles of segmentation don’t change.
You’re looking for groups that are similar in terms of needs and behaviour, and distinct enough that you should treat or serve them differently.
In B2C and B2B, the segmentation process is the same. First, you define and map your total market. Then you decide which is the most attractive target segment to go after.
The only difference in B2B segmentation is how you’ll use it. In B2C, you’re targeting every individual within your segment. Within a B2B segment, you’re not going to talk to every employee, because most of them have nothing to do with the decision-making process. That means there’s an extra layer of targeting to think about in understanding not just the company, but the decision unit inside it.
Variables might include firmographics, buying structure, procurement involvement, organisational maturity, and commercial spend. But the logic is the same: cluster on meaningful differences, then use observable identifiers to make the segments usable.
Segmentation is not the end goal. It’s one part of the strategic triad: STP (segmentation, targeting, and positioning), and carries us forward from market research into marketing strategy. The point of a market segmentation is to use it.
In B2B segmentation then, it becomes even more important to bring your sales team into the process. They should be able to “kick the tyres” and recognise real accounts in each segment. They should be able to confirm that the numbers check out and that segments reflect how real organisations actually behave.
“It’s not just your map, it’s theirs as well,” says Mark Ritson.
Segmentation has to hold up in the real world, which is why a simple, strategically-minded approach is always the best one.
Why segmentation deserves senior attention
Effective brands don’t win by doing more. They win by concentrating effort on the right customers, at a scale that makes commercial sense. That focus starts with segmentation.
Segmentation aligns marketing, sales, and leadership around a shared view of the market. It brings clarity to targeting, confidence to positioning, and strategic discipline in investment decisions.