---
title: "Customer segmentation and target segment"
subject: "Entrepreneurship Development"
chapter: 4
key: "semester_7/entrepreneurship_development:customer-segmentation-bases"
source: https://www.bctengineer.com/q/semester_7/entrepreneurship_development/customer-segmentation-bases
site: BCT Engineering
---

# Customer segmentation and target segment

Entrepreneurship Development · Chapter 4: Business Model

- Asked in: year not given, 5 marks
- Video: [Market Segmentation (With Real World Examples) | From A Business Professor](https://www.youtube.com/watch?v=IrJ1cNIfmsk) — Business School 101
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/entrepreneurship_development/customer-segmentation-bases
- Whole chapter: https://www.bctengineer.com/md/semester_7/entrepreneurship_development/chapter-4

## Question

Explain the bases of customer segmentation. How does a startup choose its early-adopter segment?

## Short answer

Segment by demographic, geographic, psychographic and behavioural bases; start with a narrow, reachable, high-pain early-adopter group and expand later.

## Answer

**Customer segmentation** divides the market into groups of customers with similar needs or behaviour, so that the offer and message can be fitted to each group.

#### Bases of segmentation
| Basis | Examples |
|---|---|
| Demographic | Age, gender, income, occupation, family size |
| Geographic | City, region, urban/rural, climate |
| Psychographic | Lifestyle, values, personality |
| Behavioural | Usage rate, loyalty, benefits sought, occasion |
| Firm-based (B2B) | Industry, company size, purchase volume |

A good segment is **measurable, reachable, large enough, distinct and actionable**.

#### Choosing the early-adopter segment
- Pick a **narrow group** that feels the problem most strongly and is already trying to solve it.
- Check that they can be reached cheaply (one channel, one place).
- Check willingness and ability to pay.
- Prefer a group that talks to others (influencers), so word of mouth helps.
- Start with this beachhead segment, win it, and then expand to adjacent segments.

Example: a fitness-tracking device may start with urban office workers aged 25-40 with gym membership, before offering to the general public.

**Answer:** Segment by demographic, geographic, psychographic and behavioural bases; start with a narrow, reachable, high-pain early-adopter group and expand later.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Customer segmentation divides the market into groups with:
   A. Similar needs or behaviour
   B. Equal incomes only
   C. The same competitors
   D. The same suppliers
   Answer: A. Groups share needs or behaviour so offers can be fitted. (Key point: Segmentation)

2. Which is a psychographic basis?
   A. Age
   B. Lifestyle and values
   C. City
   D. Company size
   Answer: B. Psychographic covers lifestyle, values and personality. (Key point: Psychographic basis)

3. A good segment is:
   A. Very small and hidden
   B. Impossible to measure
   C. Measurable, reachable, large enough, distinct and actionable
   D. Identical to all other segments
   Answer: C. These are the five criteria of a good segment. (Key point: Good segment)

4. The early-adopter segment should be:
   A. The whole national population
   B. The group that cares least
   C. The most expensive group to reach
   D. A narrow group that feels the problem strongly and is cheap to reach
   Answer: D. Start with a narrow beachhead segment and expand later. (Key point: Early adopters)

## Related in Entrepreneurship Development

- [Market study and customer feedback](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Amarket-study-feedback) — Entrepreneurship Development, chapter 2
- [Customer lifetime value and CAC numerical](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Altv-cac-unit-economics) — Entrepreneurship Development, chapter 4
- [Evolution and importance of enterprise](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Aevolution-importance-enterprise) — Entrepreneurship Development, chapter 1