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Segmenting means dividing markets into homogenous groups based on similar characteristics or traits. To divide a market into segments, firms use segmentation variables that describe the characteristics of each part of the market.

1.    Demographic
Demographic segmentation is a market segmentation strategy whereby the intended target audience for a given product is divided into categories based on demographic variables (demographics). Demographic segmentation is the most popular basis for dividing groups, primarily because consumer usage and wants or needs usually match demographic categories, but also because demographic variables are easy to measure and obtain. Demographic variables can include age and life cycle, gender, income and generation.

2.    Geographic
Geographic segmentation is a market segmentation strategy whereby the intended target audience for a given product is divided according to geographic units, such as nations, states, regions, counties, cities, or neighbourhoods. Marketers will tailor marketing programmes to fit the needs of individual geographic areas, localising the products, advertising, and sales effort to geographic differences in needs and wants. Marketers can also study the population density or regional climate as factors of geographic segmentation.
Benefits:
-    New ways to generate sales in sluggish and competitive markets
-    Scanner data allow assessment of best selling brands in region
-    Regional brands appeal to local preferences

Limitations:
-    Does not ensure that all consumers in a location will make the same buying decision.

Psychographic
Psychographics can be defined as the study of consumer lifestyles. Psychographic segmentation calls for dividing a market into different groups based on activities interests and opinions: 
-    Activities – leisure, sports, entertainment, shopping behaviour.
-    Interests – role perceptions, level of social interaction.
-    Opinions –such topics as politics, social and moral issues.

Psychographic Segmentation of Global Markets (Boone & Kurtz, 2004)
1.    Strivers:  the largest segment, value professional and material goals more than the other groups.
2.    Devouts: value duty and tradition.
3.    Altruists:  emphasise social issues and societal well-being.
4.    Intimates:  value family and personal relationships.
5.    Fun seekers: focus on personal enjoyment and pleasurable experiences.
6.    Creatives: seek education, technology, and knowledge, and their male-female ratio is roughly equal. Many creatives live in Western Europe and Latin America.

Psychographic segmentation is difficult and risky because:
-    Lifestyles are complex
-    Many intangible variables are involved
-    It is difficult to define which variables are relevant

3.    Behavioural
Behavioural segmentation differs because instead of focusing purely on the characteristics of the customer, it looks at the relationship between the customer and the product. It is a market segmentation strategy whereby the division of the target market is made according to the patterns in which the people in the market live and spend their time and money. Buyers in a market will differ in their wants, resources, locations, buying attitudes, and buying practices and any of these variables can be used to divide a market. In behaviour segmentation, potential buyers of a product are divided into groups based on their knowledge, attitude, uses, or responses to a product. These variables can include:
-    Occasions
-    Benefits sought from the product
-    Usage rate
-    Loyalty status
-    User status

Marketers rarely limit their segmentation analysis to only one or a few variables. They are increasingly using multiple segmentation bases in an effort to identify smaller, better defined target groups. In addition, when marketing the product to a global audience companies can use an approach called “intermarket” segmentation. This means they form segments of consumers who have similar needs and buying behaviour even though they are located in different countries.

Requirements for effective segmentation
Not all segmentations are effective. To be useful, market segments must be:
-    Measurable: The size, purchasing power, and profiles of the segments can be measured.
-    Accessible: The market segments can be effectively reached and served.
-    Substantial: The market segments are large or profitable enough to serve.
-    Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programmes.
-    Actionable: Effective programmes can be designed for attracting and serving the segments.