Market segmentation
Market segmentation is the identification of portions of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potential customers.
Why segment your market?
Different groups of customers have different needs and any marketing initiatives undertaken will be more effective if the needs of a particular group are understood and catered for. Usually, a “one size fits all” approach does not work well.
For market segments to be of value in the context of marketing initiatives, they need to be :
A market segment should be:
- measurable and identifiable
- accessible by communication and other distribution channels
- different in how group members react to a marketing initiative
- stable (not changing too quickly)
- of a sufficient size to make it worthwhile and profitable
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Consumer markets
Consumer markets can be segmented using the following characteristics.
- Geographic (eg, region, population density, climate)
- Demographic (eg. Age, gender, family size, education, income etc)
- Psychographic (eg. Interests, opinions, attitudes etc)
- Behavioralistic (eg. Brand loyalty, usage rate, readiness to buy, benefits sought)
Business segmentation
Most often segmented on characteristics such as:
- Location
- Company type (eg. Size, industry, decision makers, purchasing criteria)
- Buyer behaviour (eg. Usage rate / requirement, buying status, order size)
