One of the biggest mistakes companies make with customer segmentation is using a one-size-fits-all approach. The truth is, the type of product or service you sell fundamentally changes how you should think about segmenting your customers.
The key factor that should drive your segmentation approach? Purchase frequency. How often people buy your product completely changes the psychology behind their decision-making – and therefore how you should group and target them.
Get this wrong, and you’ll end up with segments that look neat on paper but fail to drive real business results. Get it right, and you’ll unlock insights that transform how you market, innovate, and grow.
Let’s explore how purchase frequency should shape your segmentation strategy and see real examples of companies getting this right.
Why purchase frequency changes everything
Think about the last time you bought a car versus the last time you bought a coffee. The decision-making process was completely different, wasn’t it?
For the car (low frequency), you probably researched extensively, considered your long-term needs, thought about what the purchase said about you, and made a decision based on who you are as a person.
For the coffee (high frequency), your choice was likely driven by the situation – where you were, what time of day it was, who you were with, how you were feeling in that moment.
This fundamental difference in decision-making psychology should drive how you approach segmentation for your category.
Low purchase frequency: Focus on people types
When to use this approach:
- Products purchased infrequently (cars, holidays, insurance, furniture)
- High-consideration purchases
- Products with strong identity or lifestyle associations
- Services with long commitment periods
The psychology of infrequent purchases
For categories with low buying frequencies, customers have time to think, research, and consider. Their decision is heavily influenced by:
- Personal identity: What does this purchase say about me?
- Life circumstances: What’s happening in my life right now?
- Values and priorities: What matters most to me?
- Research and involvement: How much effort am I willing to invest?
How to segment: Relationship with the category
Segment people according to their relationship with the category and available products. Look at:
Engagement patterns: How do they research and buy products? Are they thorough researchers or quick decision-makers?
Motivations and goals: What are they ultimately trying to achieve? Status, security, convenience, value?
Involvement level: How important is this category to their overall life and identity?
Values and attitudes: What broader beliefs and priorities influence their choices?
Lifestyle context: How does this product or service fit into their broader life?
Example: Athletic footwear
Let’s look at trainers – a perfect example of low-frequency, high-involvement purchasing:
The sports enthusiast: Visits the gym or plays sports regularly. Prioritises performance features, technical specifications, and durability. Willing to pay premium prices for functional benefits.
The fashion-forward: Treats trainers as a style statement. Focuses on latest trends, brand prestige, and how shoes complement their overall look. Values exclusivity and newness.
The practical buyer: Wants comfortable, versatile shoes for everyday wear. Prioritises value, durability, and multi-purpose functionality. Less concerned with trends or technical features.
The comfort seeker: Prioritises all-day comfort above everything else. May have specific needs like wide feet or arch support. Willing to sacrifice style for comfort.
Each segment has fundamentally different needs, shops in different ways, and responds to different messages – even though they’re all buying trainers.
Implications for strategy
Product development: Create different products for different people types, each with distinct feature sets and positioning.
Marketing messages: Speak to different motivations – performance for athletes, style for fashion-conscious buyers, value for practical purchasers.
Channel strategy: Reach people where they naturally research and shop for your category.
Brand positioning: Position your brand to resonate with your priority segments’ values and self-image.
High purchase frequency: Focus on occasions
When to use this approach:
- Products purchased frequently (food, beverages, entertainment)
- Low-consideration purchases
- Products used in different contexts
- Categories where the same person makes varied choices
The psychology of frequent purchases
For high-frequency categories, the same person makes different choices based on the situation. Their decision is driven by:
- Context: Where am I? What time is it? What’s the situation?
- Company: Who am I with? What’s appropriate for this group?
- Mood and needs: How am I feeling? What do I need right now?
- Convenience: What’s available and accessible?
How to segment: "Multiple-me" occasions
Instead of segmenting people, segment the different moments or occasions when purchase decisions are made. We call these “Demand Spaces” – the different moments that impact how we view certain products and our needs from them.
Look at:
Situational context: Where, when, and with whom is the purchase happening?
Immediate needs: What does the person need in this specific moment?
Decision-making process: How much thought goes into the choice in this situation?
Constraints: What limits their options (time, location, budget, social appropriateness)?
Example: Alcoholic beverages
Consider these two drinking occasions for the same person:
Saturday night with friends:
- Context: Evening, social setting, relaxed atmosphere
- Needs: Fun, social lubrication, shared experience
- Suitable choices: Beer, cocktails, shots, party drinks
- Decision factors: What will be fun and sociable?
Sunday lunch with grandparents:
- Context: Daytime, formal family setting, traditional meal
- Needs: Respectability, tradition, complement to food
- Suitable choices: Wine, perhaps a quiet beer, traditional spirits
- Decision factors: What’s appropriate and respectful?
The same person, but completely different purchase drivers. You wouldn’t arrive at your grandparents’ house at 12pm on a Sunday with a bottle of tequila, and producing a bottle of Bristol Cream sherry at pre-drinks would probably go down just as poorly.
More demand space examples
Coffee category:
- Morning commute: Quick energy boost, convenience, routine
- Afternoon meeting: Professional setting, focus enhancement, social ritual
- Weekend treat: Indulgence, relaxation, quality experience
- Late night study: Alertness, sustained energy, minimal fuss
Streaming entertainment:
- Family movie night: Something for everyone, appropriate content, shared enjoyment
- Solo weeknight: Personal preference, easy watching, relaxation
- Date night: Impressive choice, shared interest, conversation starter
- Background viewing: Familiar content, low attention required, comfort
Implications for strategy
Product portfolio: Create different products for different occasions rather than different people types.
Marketing campaigns: Focus on when and why to choose your product rather than who should choose it.
Distribution strategy: Ensure availability in the right places for each occasion.
Innovation pipeline: Develop solutions for underserved occasions or emerging contexts.
The hybrid approach: When categories evolve
Some categories don’t fit neatly into low or high frequency. Consider:
Technology products: Smartphones are infrequent purchases but used constantly. You might segment by person type for the purchase decision but by usage occasion for accessories and services.
Fashion: Clothing purchases vary by item type. A winter coat is low-frequency (person-based), but accessories might be high-frequency (occasion-based).
Financial services: Core banking is person-based, but specific transactions might be occasion-based.
Determining your approach
Ask yourself these questions:
Purchase frequency questions
- How often do customers buy? Monthly or more = high frequency. Yearly or less = low frequency.
- How much consideration goes into each purchase? High consideration = person-based. Low consideration = occasion-based.
- Do the same customers make different choices over time? If yes, consider occasion-based segmentation.
Context questions
- Does the purchase situation significantly influence choice?
If yes, lean towards occasion-based. - Is the product strongly tied to identity or lifestyle?
If yes, lean towards person-based. - Do customers research extensively before buying?
If yes, person-based is likely better.
Strategic questions
- Where do you see the biggest opportunity?
Getting more people to buy (person-based) or getting people to buy in more situations (occasion-based)? - What drives competitive advantage in your category?
Better understanding of customer types or better understanding of usage contexts?
Implementation tips
For low-frequency (Person-Based) segmentation:
- Research methods: In-depth interviews, lifestyle surveys, psychographic profiling
- Activation: Persona-based marketing, targeted content, lifestyle partnerships
- Measurement: Brand affinity, consideration, long-term customer value
For high-frequency (Occasion-Based) segmentation:
- Research methods: Diary studies, ethnographic research, moment-based surveys
- Activation: Context-aware advertising, occasion-specific products, situational messaging
- Measurement: Share of occasions, purchase frequency, context penetration
The strategic advantage
Getting your segmentation approach right for your category’s purchase frequency creates sustainable competitive advantage:
Better innovation: You develop products that meet real needs rather than assumed ones.
More effective marketing: Your messages resonate because they match how customers actually think about your category.
Smarter resource allocation: You focus investment where it will have the most impact.
Stronger customer relationships: You engage customers in the right way at the right time.
Key takeaways
The key is matching your approach to your product and customer reality, not forcing a one-size-fits-all framework.
Low frequency = Focus on people types. Understand who your customers are, what drives them, and how your product fits their identity and lifestyle.
High frequency = Focus on occasions. Understand the different situations where your product gets chosen and what drives decisions in each context.
Don’t try to use a one-size-fits-all method. Instead, think about how and why people buy your product, and focus on the factors that most influence their choices.
When you align your segmentation approach with the natural psychology of your category, you unlock insights that drive real competitive advantage.
Next in our series: We’ll explore how to choose the right data for building your segments – from demographics and behaviours to attitudes and needs – and ensure your segmentation delivers actionable insights.