Market segmentation is a process of dividing the prospective consumer base of a product into separate groups so that the product and the way it is sold can be altered to make it more appealing to each segment.
The changes that could be made in the product can include its features, price, accessibility options, etc. The price of the product can also be changed to suit the consumers of each segment. To do this only the features that are most used by consumers of the segment can be kept and the others removed. Advertising can also be a targeted one with separate advertisements created for each segment and shown on media that would be most likely to influence them and for which the company would have to make the least expenditure.
For example, a company selling smart phones could increase the popularity of its phones by the use of market segmentation. Let us assume the different market segments they identify is one consisting of young teenagers, one that has business users and one with those who would prefer a relatively less expensive model. The model for the first group can be altered to make it appropriate for use with games, the social media and music. The model for the second group could have more business appliactions and a higher processing speed and the model for the budget buyer could cut down on the high end features and use a less powerful processor, decrease the memory and the resolution of the camera. For the marketing of the three versions, the first model's campaign could rely predominantly on the social media, the phone for the business users can be show-cased at corporate events and through a reduction in price if a large number is bought by a single company, and the low end phone can be advertised in discount stores and in areas where people are not very well off and would prefer a low cost smart phone even without high-end features.
In the example describes above you will see the use of geographic, demographic, psycho-graphic, and behavioral segmentation.