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A/B Testing

Segmentation

Dividing market or users into distinct groups

Segmentation is the practice of dividing a market or user base into distinct groups sharing similar characteristics, needs, or behaviors, enabling targeted strategies and better product-market fit. Rather than treating all users uniformly, segmentation recognizes diversity and allows customized approaches. Common segmentation bases include demographic characteristics like age, location, or industry; firmographic attributes like company size or revenue for B2B; behavioral patterns including usage frequency, feature adoption, or engagement; psychographic factors like values, attitudes, or lifestyle; needs-based grouping by problems or jobs to be done; and technographic segmentation by technology usage and sophistication. For example, a product might segment users as Power Users needing advanced features, Casual Users wanting simplicity, and Administrators requiring controls and analytics. Effective segments are measurable with available data, substantial enough to matter, accessible through marketing and sales, differentiable with distinct needs, and actionable enabling different strategies. Segmentation enables several capabilities: targeted feature development addressing specific needs, personalized messaging resonating with segments, optimized pricing and packaging, focused go-to-market strategies, better resource allocation, and improved product-market fit. The process involves identifying potential segmentation criteria, collecting and analyzing data, defining distinct segments, validating segments have different needs, prioritizing target segments, and developing segment-specific strategies. Benefits include more relevant products for target segments, efficient resource use, competitive advantage through focus, better customer satisfaction, and clearer positioning. Challenges include data availability, balancing focus with breadth, avoiding over-segmentation complexity, and maintaining consistency across segments. Best practices include starting with hypothesized segments then validating, using multiple data sources, focusing on meaningful differences, avoiding too many segments, and revisiting as market evolves. Product managers use segmentation to prioritize features, guide design decisions, inform pricing, target launches, and allocate resources. Strong segmentation enables serving customers better through targeted approaches rather than one-size-fits-all products.

Learn about Segmentation in product strategy. Discover how grouping customers enables targeted strategies and better product-market fit.