Conduct Market Segmentation & Keep Money on the Table

Broad targeting wastes money fast.

Picture this: You’ve spent six months perfecting your product, invested thousands in marketing, and launched with a bang… only to realise your ads are landing with people who will never buy from you. The clicks look good, but your sales tell a different story.

It’s the startup version of selling umbrellas in the desert — the wrong product, in the wrong place, at the wrong time.

The truth? Most founders don’t fail because they have a bad idea. They fail because they’re talking to everyone instead of focusing on the right people.

Conducting market segmentation is your shortcut to understanding exactly who to target, how to reach them, and what to say so your message cuts through.

Let's walk through how to segment your market.

Understand the market. Segment. Make your message fit the hole.

What Is Market Segmentation?

Market segmentation is the process of dividing your broader market into smaller, more defined groups of people who share similar characteristics, needs, or behaviours.

Here’s what this includes:

• Demographic segmentation — age, gender, income, education

• Geographic segmentation — city, region, climate

• Psychographic segmentation — values, lifestyle, personality

• Behavioural segmentation — buying habits, brand loyalty, usage rate

• Firmographic segmentation (for B2B) — industry, company size, revenue

Each of these can give you a sharper marketing focus — but only if you use them with intent and in the right combination.

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Why It Matters

Here’s why I recommend every founder take this seriously:

Your marketing budget goes further

When you target a defined group, your ad spend stops leaking on people who were never going to buy from you.

Your offer resonates instantly

You can tailor your messaging to the specific needs and language of your audience — making it feel like you’re speaking directly to them.

Your conversions go up

Relevant offers to a relevant audience = higher conversion rates and better ROI.

You spot opportunities faster

By segmenting online and offline markets, you uncover untapped niches your competitors are missing.

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What You’ll Need Before You Start

Before you dive in, make sure you’ve gathered these:

• Access to customer data (sales, website analytics, CRM records)

  
  

• Google Analytics or similar tool for behavioural insights

  
  

• Australian Bureau of Statistics (ABS) data for demographic

  
  

• Industry reports or market research subscriptions

  
  

• Customer surveys or interview notes

Start by understanding the full size of the market you could serve before narrowing your focus.

How to Conduct Market Segmentation:

Step-by-Step

Step 1: Define Your Total Addressable Market (TAM)

Start by understanding the full size of the market you could serve before narrowing your focus.

• Use credible sources like the Australian Bureau of Statistics (ABS) and IBISWorld for local, industry-specific numbers.

• Focus on who can realistically buy from you, not just anyone who might.

Mentor Tip: 

ABS and IBISWorld data will help you avoid guesswork and ground your market size in reality. 

Warning: Overestimating your market can make your strategy unrealistic and waste resources.

Result: You have a clear, data-backed understanding of your market’s maximum potential size.

Step 2: Choose Your Segmentation Criteria

Decide how you want to divide your market. The main segmentation types are:

• Demographic (age, gender, income, education)

• Geographic (location, climate, region)

• Psychographic (values, lifestyle, personality)

• Behavioural (buying patterns, product usage)

• Firmographic (B2B-specific: industry, company size, turnover)

Choose the criteria that best match your business model and goals.

Result: You have selected 1–3 criteria that will guide how you segment your market.

Step 3: Collect Your Data

Gather accurate, relevant data to back your segmentation.

• Online behaviour: Google Analytics, Meta Insights, TikTok Analytics

• Demographics: ABS data, customer records

• Psychographics: Customer surveys, interviews, polls

Result: You have a reliable dataset that reflects your potential customers’ demographics, behaviours, and attitudes.

Step 4: Analyse and Group Your Market

Look for patterns and trends in the data. 

Example: “Professionals aged 35–45 in Sydney who value sustainability and purchase eco-friendly products monthly.”

Group similar customers together — these are your segments.

Result: You have a small number of clear, distinct customer segments based on real data.

Step 5: Validate with Real Customers

Before committing to your segments, test them:

• Run a small, targeted ad campaign

• Conduct short interviews

• Offer a sample product to see who engages

Result: You have proof that your segments respond positively to your offers and messaging.

Step 6: Create Buyer Personas

For each segment, create a fictional but realistic customer profile. 

Include:

• Name and short backstory

• Demographics

• Goals and frustrations

• Buying triggers and motivators

Result: You have detailed personas you can share with your team to guide product development and marketing.

Step 7: Align Products and Messaging

Match your offers and marketing messages to each segment’s needs and desires.

• One segment may need price incentives.

• Another may respond better to premium branding or eco-friendly credentials.

Result: Your products and campaigns are tailored to each segment for maximum relevance and conversion.

Step 8: Track and Refine

Market conditions change quickly.

Mentor Tip: 

Revisit your segmentation every quarter. Update it with fresh data and adjust your marketing accordingly.

Result: Your segmentation stays relevant, accurate, and profitable over time.

Match your offers and marketing messages to each segment’s needs and desires.

What It Costs and How Long It Takes

Here’s what to budget for:

• Market research tools: $50–$300/month

• Industry reports: $200–$2,000 per report

• Surveys/interviews: $0–$500 depending on incentives

• Time: 2–4 weeks to complete initial segmentation

Costs can vary, but these figures will give you a reliable starting point.

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Common Mistakes Founders Make

Trying to target everyone

If your audience is “everyone,” your message resonates with no one.

Using outdated data

Consumer behaviour changes quickly — stale data leads to wrong decisions.

Over-segmenting

Too many segments stretch your resources thin and dilute impact.

Ignoring offline markets

Founders often fixate on digital and miss local or in-person opportunities.

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What to Do Right Now

✅ Need help? Book with Noize 

Get your segmentation done with experts who know the Australian market inside out. [Contact Noize.com.au]

✅ Get the StartUp Deck 

A complete toolkit to take your business from idea to execution — including segmentation, marketing, and growth strategies [theStartUpDeck.com]

COMING in 2026...

✅ Carry out a Market Segment with our 2 page Template 

Your quick-start tool for recording your business processes, and storing segmentation to your marketing plan [ProDesk.com]

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The Bottom Line

Segmentation isn’t a “nice to have” — it’s a survival skill for founders. The sooner you focus on the right people, the faster you’ll see traction. Start now. It’s easier than fixing a failed launch.

Segmentation is dividing the market; targeting is choosing which segments to go after.

FAQs

How often should I update my segmentation? 

At least every quarter or after any major market shift.

Do I need paid tools to do segmentation? 

No — but they speed up the process and improve accuracy.

Can I segment both online and offline markets? 

Yes, and you should. It gives a fuller picture of your audience.

What’s the difference between segmentation and targeting? 

Segmentation is dividing the market; targeting is choosing which segments to go after.

How small should a segment be?

Small enough to be specific, big enough to be profitable.