Traditional, demographic-based market segmentation is an invaluable tool for identifying the groups of people most likely to use a product. Demographic based research is based on how existing customers behave. As it provides information about existing behavior, demographics are not designed to provide insight into what a product should be, how the product needs to work, and how it is best designed.
A market research study might identify that 53% of drivers aged 25–54 say that they sometimes get distracted while driving, and that side air bags will affect their purchase decision. A persona, on the other hand, would show that Jim, aged 37, uses his iPod and cell phone virtually every time he drives by himself, is concerned that this makes him a more unsafe driver, and he wishes that there was some way to meet his desire for communication and listening when he drives in a way that wouldn’t decrease his ability to deal with potentially unsafe situations.
Market segmentation is a great input into persona development and can help identify the types of users to profile. However, it rarely provides the richness required to develop personas. Personas share some attributes with traditional customer segmentation models. But each of these tools supports different kinds of decisions. As a result, they differ in important ways as shown in the following table taken from "
How Design Personas Differ From Typical Customer Segmentation Models" by Moria Dorsey of Forrester Research, May 2006.

Traditional market segmentation models don’t provide the key information about users’ goals, attitudes, and behaviors that is required for effective product creation, design, and messaging efforts – personas do. Valid personas that are derived from primary user research enable a shared point of view among the diverse group of people who affect the customer experience.
When personas and segments are combined, they create not only a true understanding of why people do what they do, but who these people are, where they live, and what they buy. As seen in the figure below, segmentation prescribes the basic demographic questions for the groupings of target customers. The persona descriptions get at the why behind the what.

People typically do not know what they don’t know and may not fully understand their own behavior. Because of this, surveys can not provide a complete picture of the customer or even indicate a direction of development. Instead of utilizing a survey, you can ‘ask the persona’ what should be done. They allow one to answer questions that you didn’t think to ask, or are impossible to ask, on a survey, focus group or voice of the customer exercise.
Nevertheless, personas aren’t a complete departure from demographic segments. Researchers start with a firm’s existing market segments or proposed target as a basis for identifying participants for observational studies or in-depth interviews (see Figure 2). This way, practitioners ensure they gather data from a reliable source — the intended users of the channel or product that is being designed.