So if the customers are segmented as per the annual or monthly income, then this process will be called the income segmentation. Income segmentation is best suited for products which are very specific and are priced high.
These small segments help the company to target and develop the products accordingly. Since luxury products are high priced, so there is no point in targeting it to all the customers. So a better estimation of demand can build up by segmenting the customers into to income group and can be better served.