Ten years after it was first launched, Spotify has soared to the top as the world’s leading music streaming servicewith more than 170 million monthly active users, 75 million of which are paid subscription.  In both statistics, Spotify is ahead by tens of millions over its nearest rival, Apple Music.

One of the primary reasons Spotify has captured the higher market share is that it targets the right market segment or group.  While Apple Music aims to deliver its brand to a mass audience and relies on its brand to bring in subscribers, Spotify marketed its services to a niche audience and created targeted marketing campaigns.

Image source:pixfeeds.com

This underscores the importance of market segmentation for businesses, regardless of which industry they are in.

SearchSalesForce defines market segmentation as “the practice of dividing a customer base or a broad business market into groups of consumers that are similar in specific ways relevant to marketing.”  The common ways to separate the market into segments is by grouping them according to demographic information, psychographics, geographic information, or behavioral data.

Image source: marketing91.com

By implementing market segmentation, customers can be better understood, the most profitable segments can be given focus, and marketing initiatives can be optimized.  It helps businesses save on important resources, such as time, money, and energy.