FMCG Segmentation: a guide to market segmentation for fast-moving consumer goods

The FMCG sector has lived a few interesting years, after the start of the pandemic showed just how fast those Fast Moving Consumer Goods can go—even the ones you wouldn’t expect to fly off the shelves. Mix that with some supply chain issues and understaffed warehouses, and you get a challenging—yet exciting—market. 

That’s why it’s all the more important that FMCG brands, big and small, get their market segmentation right—because it’s at the core of everything they do, from marketing to new product development and even logistics. Understanding the ins and outs of how your target markets think, act and buy is critical to building successful brands.

So, how do you conduct market research to get an in-depth understanding of specifically what the segments in the highly competitive FMCG market look like? In this guide, we’ll help you get that competitive advantage in check by sharing our expertise on what really matters for market segmentation for fast moving consumer goods. 

Why is market segmentation important for fast moving consumer goods?

Having solid market segmentation research and strategies is the foundation for much of your brand’s success. Here’s how it benefits the FMCG industry specifically:

• It improves your marketing: the more you know about who you’re targeting, the higher the chances that you’ll actually reach them. Robust segmentation makes your marketing efforts more accurate. You can create content and choose channels that you know will work, instead of reaching the masses and hoping part of your target audience will notice you. With segmentation at your marketing’s core, your campaigns become more reliable and results more predictable. It will be easier to create assets—because you’ll have a better sense of what will resonate—saving you time and money, all while selling more.
• It is the base for every successful product launch: innovation in the FMCG industry is paramount. Yes, there are already countless variants of toilet paper, but in a big chunk of the market, you can’t just settle for two super-soft layers. Competition in the FMCG industry is brutal, and customer loyalty is rare, so innovation is necessary to keep people excited. That’s because of how consumers shop for these goods, it’s incredibly easy for them to reach for the competitor’s product instead of yours if they have an ever so slightly disappointing experience—even with toilet paper. FMCG products are also often priced very close to each other, and there’s no better marketing than simply having the best product available. What do audience segments have to do with all of this? It is the starting point for the new product development process. Before you start designing anything new in your product category, you need to know who you’re designing it for. This will help you create and communicate a product that targets their specific needs.
• Optimized spending: Segmentation = optimization. Who you are selling to, what marketing channels you use and where you’re selling—you can optimize it all by getting your segment analysis right. It reduces the risk that you’re using ad channels that will only cost you money, or that you open a shop in an area where exactly nobody in your target group lives. 

The fast moving consumer goods market

How has the Fast Moving Consumer Goods market been doing? 

The market of products with a short shelf life sold at relatively low cost is still booming, and evolving. An extra level of convenience is added for consumers with an explosive number of delivery services opening, dropping your bananas off at your front door in a matter of minutes. 

Because that’s what FMCG products are all about: people don’t weigh their options for days, and they spend comparatively little time and money on them, compared to slow moving consumer goods like cars and TVs. 

The global fast moving consumer goods market is projected to reach a whopping $15,361.8 billion by 2025. Let that number sink in for a minute. This translates into a compound annual growth rate (CAGR) of 5.4% from 2018 to 2025. 

Other factors that are driving the growth of the FMCG market are:

• The rise in disposable income, allowing consumers to reach for products with greater ease. Low prices make it easy for them to grab more products, boosting the revenue of FMCG businesses.  
• Tech and big data that helps FMCG retailers to sell more effectively. FMCG companies know a lot about their customers and are more and more able to use these insights to create products that will be sold quickly. 
• FMCG brands are prepping for the future by responding to the increasing demand for more sustainable products, which is also expected to boost growth in their sector. This is not just in the products, but also for example in the packaging of food. 
• People have more and more access to fast moving consumer goods, thanks to local players and delivery services. 

Curious to find out more about what’s happening in the FMCG world—especially in the food industry? Find out what industry experts from Organic Valley have to say about the 8 key US F&B trends.

FMCG Segmentation: what to consider

How do you take your segmentation skills from alright to awesome? By being precise. After all, it’s all in the details. Even twins living in the same house could fall into different segmentation categories if you dive deep enough—and that’s exactly what we recommend you to do. 

It’s crucial that FMCG companies go beyond the standard geographical and demographic criteria, mixed with maybe a handful of extra fun facts about your target group.

Thanks to consumer insights—you guessed it, like those through Attest—FMCG brands can get to know their various target markets more specifically, and with the current technologies, it’s easier than ever to collect valuable segmentation data. 

Here are the main ways FMCG businesses like yours can segment their target market to get consumer profiling segmentation data that will fuel your success.

Below we’ve detailed the four main types of consumer profiling, but here’s a quick video’ summary of each type from Attest’s Director of Customer Research Sam Killip.

Geographic factors

It’s not all location, location, location. When done right, geographic segmentation factors in a lot more than just where your consumers live.

Let’s start with the basics.

Location (country, state, city, ZIP code)

We’re pretty sure we don’t have to explain the obvious. So we won’t.

Timezone

This could be an important one to consider, for specific products. You could research whether shopping behaviors are different in various time zones, and perhaps implement time-limited discounts at strategic hours. Just a thought.

Climate and season

What does the location of your target group actually mean? How does it affect their buying patterns? Climate is an important thing to consider for some products, from ice cream to hot chocolate. 

Language

What languages are spoken in a certain location? Are there dialects you should keep in mind? Really getting a grip on the language in a place can make your marketing messages a whole lot stronger. 

Population density

Do people in urban environments shop differently than in suburban or rural areas? Chances are, they do. Really zoom in on locations and find out the differences.

Demographic factors

Most marketers understand that demographic factors are no longer a way to build a complete buyer persona or apply segmentation. But we’re here to remind you that it’s still super important to use demographic factors when segmenting your audience. 

And there are more! Also look at factors like:

• Ethnicity: it’s crucial to be aware of how ethnicity affects people and how you as a brand should handle this.
• Income: not every 40-year-old has the same budget. Move on from assumptions and research salaries and savings.
• Level of education: some people are too cool for school. It’s best that you know about it.
• Religion: for some markets and products, religion plays an important role. You don’t want to miss the mark.
• Occupation: one’s job says a lot about who and what they are exposed to and what channels they use.
• Family structure: who is someone shopping for? Who makes the grocery list?

Want to learn more about how you successfully profile your customers? Read on about how Little Moons really got to know their target market—and how they used that knowledge to achieve truly awesome FMCG success. 

The danger is that this kind of insight can lead you to assume your early adopters are similar to the people who will help you scale – in our case, young women in urban centers. But what we found when we did the audience profiling was something quite different. And so it really brought into sharp focus that, although we hugely appreciate the opinion formers who got us to this point, we need to somehow broaden our base into older and more affluent consumers.

Ross Farquhar, Marketing Director, Little Moons

How did Little Moons do it? They reached their real audience using Attest.

Psychographic segmentation

Of course, people are more than their job and role in the family. So the next step in segmentation is finding out who they are to their core. That’s right, it’s time to get personal! 

What are some questions you should ask yourself—and then your target market—about who they are? Here are some pointers:

• What are their most important values?
• What are their interests? What do they read about, listen to? (And where do they do that?)
• What are their strongest opinions? 
• What are their goals in life? At work? 
• What are their hobbies?
• What makes them happy?
• What frustrates them?

Psychographic segmentation is what gives you richer insights and a deeper understanding of your consumers. Understanding the personality traits of your consumer group is a delicate art, though, and you can’t just bombard people with personal questions for the sake of your strategy.

That’s why we dedicated another guide to the art of segmenting by psychographic factors. We’ll zoom in on the IAO variables—that means cataloging consumers’ Interests, Activities, and Opinions.

‘’By understanding the buckets your consumers fall in to, and what they prioritize when purchasing new products, you’re able to focus your campaigns on individual needs and wants, thereby appealing to a smaller section of your market more effectively.’’ – Attest

Learn how we tackle psychographic segmentation ourselves?

Behavioral segmentation 

And last but not least, we’re not just looking at who the people in your market are, but also at what they do and how they behave. After all, that’s how ‘’who we are’’ manifests itself. 

Getting a deep understanding of the behavior of your target customers will enable you to jump in at the right moment in their life and influence their next action. 

It’s important to note that the behavioral aspects are incredibly important, but probably also the most changeable things about any given person. Our spending habits evolve as we grow older, earn more or less, and hang out with different people. Where we shop and browse is influenced by who we look up to at that time. 

Our needs and desires change all the time, and with that, our actions do too. Nevertheless, getting a picture of even discovering trends in things like spending and shopping habits can be of great value in your segment research.

How to use market segmentation in your marketing strategies

Now you have all these hyper-specific segments that represent your target market, what to do with them?

Make them come alive

Don’t call your segments Segment A and Segment B. Bring them to life. Give them names that stick with your team and spark their imagination.

If you get the chance to interview people in your segments, great! These interviews or other visual materials can be a great way to make your consumer segments less abstract. Let Sales, Marketing and Product Development see who they’re working for!

Introduce them to everyone 

Because that’s crucial: you don’t create these consumer segments to put them into some industry report and vaguely base your next campaign on them, just to forget about them the next quarter.

Make sure everyone in your organization gets acquainted with who is in these segments, and how they differentiate. From customer reps to content creators: everyone benefits from having access to the latest insights into your segment. 

Test your ideas on them

With your consumer segmentation in hand, you have a great tool to make every piece of market research a big success. It’s key to understand what segment in your industry you will be asking about, for example, new product development, where you’re testing your marketing campaigns and who to ask for feedback on customer service.

Work the segments with the most potential for your business

And act on them! Your segmentation will provide you with the right insights about what segments will have a high ROI or a lot of growth potential.

But there’s more! We’ve created a detailed guide on 7 segmentation strategies you can use to generate results. A great next read for FMCG brands who are ready to take things up a notch, if we say so ourselves.

Benefit your business with FMCG market segmentation

Ready to create an action plan for a laser-focused market segmentation strategy? Make sure to include Attest in your tools to use, because we have everything and then some on board to make this process a huge hit.

Check out our market analysis survey templates to get a taste of what’s possible, and start building your own survey in seconds! 

FAQs about segmentation for FMCG