Market Segmentation

Even a seemingly universal product like Coca-Cola needs to be adapted to the preferences and behaviors of various consumer segments; the drink is not the same everywhere. In addition to packaging and marketing distinctions, the level of sweetness and effervescence are adapted to local tastes.

The challenge—and opportunity—is to find ways of dividing the market for financial services into segments that allow for a more nuanced and deeper understanding of each segment’s needs, wants, and behaviors. This understanding can in turn drive the design of a suite of products, marketing approaches, and delivery channels that meet the customer’s needs.

A 2007 study commissioned by the Bill & Melinda Gates Foundation showed that of the world’s 2.6 billion poor people living on less than $2 a day, only 180 million were micro-entrepreneurs. The same study showed that there are about 600 million smallholder farmers and 800 million youth. Designing appropriate financial services to address the specific needs of these diverse segments is an important priority.

At the market level too, we need a better grasp not just of demographics, but the behaviors that might distinguish segments. A recent CGAP study of low income consumers in Mexico found that livelihoods influence income structures, which in turn drive attitudes and behaviors, and financial management strategies. For segmentation truly to benefit an institution, research results must be actionable. Structuring the research question purposefully and then selecting the basis for segmentation (e.g., behavior, geography, livelihoods) are critical first steps.

Translating the needs of market segments into financial services, product features, and delivery channels remains a challenge. Financial service providers need to evaluate their own capacity and strategic objectives to find the appropriate balance between developing products that meet universal needs versus serving the distinct needs of specific segments, and individuals.

Topic Contact: Alexia Latortue


Mexico has 27 million households. Twenty-two million of them are low income.

This 8-minute film follows case workers in Haiti's central plateau as they work with new members of a program to reach people living in extreme poverty.

01 October 2014
This report follows up on a 2012 CGAP Financial Inclusion Landscaping study in Russia on the need for comprehensive and detailed data on financial inclusion—and exclusion—in Russia.
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English (5.75 MB) | Russian (6.28 MB)
28 August 2014
The Kenyan Financial Diaries project found that many poor households prioritized savings over liquidity when it came to their household budgets. Many viewed this as the way to get out of poverty and secure a longer term future.
13 August 2014
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21 July 2014
Serving young clients can be difficult for banks driven by short-term profit goals. But capturing the youth market can help give financial service providers a competitive edge in the long-run.
14 April 2014
1 comment
Although nearly 30 million Brazilians have moved out of poverty and into the middle class in the last decade, millions remain vulnerable due to seasonal and unpredictable income patterns.
16 April 2014
CGAP and Bankable Frontier Associates have begun a study that examines the financial lives of smallholder agricultural families in Mozambique, Pakistan, and Tanzania. Here, we look at how we chose an appropriate site in Pakistan.
11 April 2014
Using data from a national household survey in Brazil, we segmented Brazilian respondents into six categories: Financially Excluded; Unbanked Bill Payers; Selective Users; Privileged Agent Non-Users; Banked Bill Payers; and Agent Super-Users.
March 25, 2014
Janalakshmi has been working for several years to diversify its products to meet the need of its more than one million customers. But putting the customer at the center of decision making requires an institution to re-orient its entire operations, which is not easy.


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