---
title: "Product segmentation: meaning and example | Product Metrics"
description: "Product segmentation groups products by performance and business context. See how Product Metrics connects six segments to Merchant Center custom labels."
canonical: "https://www.productmetrics.io/glossary/product-segmentation"
pageType: article
language: en
publisher: "Product Metrics"
author: "Berend Vrakking"
datePublished: 2026-10-15
dateModified: 2026-10-28
---

> Content index: https://www.productmetrics.io/llms.txt

# Product segmentation

Product segmentation in ecommerce advertising groups products by shared performance or business characteristics so merchants can give each group a suitable priority.

## Product Segmentation example

Performance groups:

| Product group | Advertising clicks | Return |
| --- | --- | --- |
| Stars | High | High |
| Question Marks | High | Medium |
| Dogs | High | Low |

These groups describe advertising volume and return against your chosen target, not sales volume. Illustrative data.

## Put it into practice

- [Explore it: Product Segmentation](https://www.productmetrics.io/product-segmentation): See the six segments, rules and label workflow.
- [Read the guide: Optimise Google Shopping ads](https://www.productmetrics.io/blog/optimize-google-shopping-ads): Apply product-level performance context to Shopping.

## Product Segmentation: one product and the whole account

Product Metrics ML puts products into six segments using advertising click volume and return measured as ROAS or POAS. An account average hides this distribution; product groups show where to investigate performance.

The six segments are Stars, Question Marks, Cash Cows, Dogs, Drainers and Ghosts. Product Metrics writes approved segment labels to Merchant Center. Configured campaigns then use those labels; the merchant controls campaign structure and priorities.

## Product Segmentation: common mistake

Confusing a segment with an instruction to change a price or budget automatically. A segment describes performance; merchant rules and campaign configuration determine how it is used.

## Product Segmentation: questions

### Do I need margin data to segment products?

No. Product Metrics segments products using ad clicks and ROAS, so you can start without margin data. Once you connect margins, it can use POAS as the return measure instead, which shows whether each product’s advertising covers that product’s own costs.

### Are segments the same as custom labels?

No. A segment is the classification of a product, such as Stars or Dogs, based on advertising clicks and return. A custom label is a Merchant Center field that can carry that segment into your campaigns. Product Metrics writes approved segments to custom labels, and you decide how campaigns use them.

## Sources

- [Product Metrics: Product Segmentation](https://www.productmetrics.io/product-segmentation)
- [Google: Custom label 0–4](https://support.google.com/merchants/answer/6324473?hl=en)

## Keep reading

- [POAS calculator](https://www.productmetrics.io/poas-calculator): Compare contribution return before choosing priorities.
- [Custom labels](https://www.productmetrics.io/glossary/custom-labels): The fields that carry a product group into campaigns.
- [ROAS](https://www.productmetrics.io/glossary/roas): One return measure used for segmentation.

---

Written by Berend Vrakking, founder of Product Metrics. Last updated 2026-10-28.

HTML version: https://www.productmetrics.io/glossary/product-segmentation