The basis for successful marketing is to understand and satisfy consumer needs. Sometimes it is even possible to satisfy one individual customer’s needs. In the tourism industry an individually customized tourism experience can be developed, but the market for such high-end tourism products is small. This does not, however, mean that the only alternative is to appeal to the mass market. The intermediate solution is to understand which groups of tourists have similar needs and develop tourism products that match group needs. This approach is referred to as market segmentation. The aim of this chapter is to analyze market segmentation studies in tourism research over the past decade, review recent prototypical examples of different segmentation approaches and discuss theoretical and methodological issues related to market segmentation studies. Recommendations are presented that provide guidance to researchers and students with respect to how to best avoid potential pitfalls that may lead to misinterpretations of segmentation solutions and, consequently, sub-optimal strategic decisions.