Knowing who’s who among your customers is called market segmentation. It’s the process of breaking down your customers into segments that share distinct similarities.

Here are some common market segmentation terms and what they mean:

  • Geographics: Organizing customers by their physical locations to determine the regions, counties, states, countries, zip codes, and census tracts where current and likely prospective customers live.
  • Demographics: Grouping customers into groups based on factors such as age, sex, race, religion, education, marital status, income, and household size.
  • Psychographics: Splitting up customers by lifestyle characteristics, behavioral and purchasing patterns, beliefs, values, and attitudes about themselves, their families, and society.
  • Geodemographics: This is a combination of geographics, demographics, and psychographics. Geodemographics, also called cluster marketing or lifestyle marketing, is based on the age-old idea that birds of a feather flock together — that people who live in the same area tend to have similar backgrounds and consuming patterns. Geodemographics helps you target your marketing efforts by pinpointing neighborhoods or geographic areas where residents share the age, income, lifestyle characteristics, and buying patterns of your prospective customers.