Your Segmentation is Nuts! Why people who eat peanuts have 3.5 times more in common than Gen Z

Marketers love to talk about segmentation but, too often, they get it completely wrong. One of the biggest mistakes is treating broad, arbitrary groups—like industry sectors or entire generations—as if they are meaningful segments. They aren’t. In fact, not only are these approaches wrong, they’re stupid!

Industry sectors are not segments

Let’s start with the idea that an “industry sector” is a useful segmentation tool. Just because two companies belong to the same industry does not mean they have the same needs, challenges, or buying behaviours. For a hotel looking to segment their MICE business, midweek conference guests could not be more different than an association looking for a weekend event, but they could absolutely be in the same "industry sector".

A useful segment should be homogeneous within and different from other segments. If two businesses in the same segment have wildly different needs, it’s not a real segment—it’s just lazy categorisation. And by using lazy categorisation like this, segmentation hasn’t really happened at all. Segmentation is about diagnosing the whole market—it’s not about targeting. Targeting is strategy, not diagnosis.

Generation-based segmentation is nuts!

Even worse than industry-based segmentation is the lazy reliance on generational stereotypes. The idea that every millennial (or Gen Z, or Boomer) behaves the same way because they were born in the same decade is preposterous.

BBH Labs’ research, Puncturing the Paradox, proves this point beautifully. They found that there is more variation within generations than between them. Grouping people by generation tells us nothing meaningful about their behaviours or attitudes—it just tells us that one is older than the other. This is not segmentation; it’s just a lazy substitute for actual insight.

Their research included a study on group cohesion across different categories, showing that people who eat nuts or watch true crime documentaries have more in common than people within a single generational cohort. The graph below from BBH Labs illustrates just how meaningless generational segmentation is:

(BBH Labs: Puncturing The Paradox: Group cohesion and the generational myth)

Generational labels are broad, meaningless, and often contradict themselves. One moment, Millennials are described as financially cautious and risk-averse; the next, they’re called reckless crypto investors. The truth is that meaningful customer behaviour is not driven by birth year but by attitudes, habits, and purchase behaviours.

What makes a good segment?

Real segmentation should be grounded in how people behave, not when they were born or what industry they work in. It should be based on variables that are meaningful to your business, not just a convenient categorisation. The best segments:

• Are internally similar – Everyone in the segment shares a meaningful behavioural or attitudinal trait that influences purchasing decisions.

• Are externally different – The segment behaves in a distinct way compared to other groups.

• Are mutually exclusive – A person or business should not belong to two segments at the same time. If they do, your segmentation is flawed.

• Are actionable – You should be able to tailor specific marketing actions to each segment.

   

The danger of bad segmentation 

Bad segmentation doesn’t just lead to wasted marketing spend—it actively harms real strategy. When marketers use meaningless segments like “Millennials” or “automotive industry” they end up making sweeping assumptions instead of understanding real customer needs. Worse still, they risk alienating their actual audience by targeting them based on stereotypes instead of real motivations.

The takeaway: do it right or don’t bother

Segmentation is one of the most powerful tools in marketing, but only when done correctly. That means ditching lazy categories like industry sectors and generations, instead focusing on real, behaviour-based segments that drive purchase decisions. If your segmentation doesn’t make each group meaningfully different from the others, it’s not segmentation—it’s just bad marketing.