Market Segmentation

Any single product does not necessarily appeal to all customers alike, it varies depending on their needs, taste and lifestyle. Therefore, in order to make their marketing strategies effective the sellers segregate the markets, also termed as market segmentation.

Market segmentation is the division of markets into categories or groups of customers with similar tastes or needs; it would also be based on the region, income group, cultures, etc. The markets are divided into segments so as to enable the seller to market his products in an effective manner.  It helps the seller in identifying which market sectors are most important and how to best address its needs.Sometimes even the same product is advertised in different ways to different groups, and in some cases the product is modified to appeal to a specific group of buyers. In general, it is used to maximise the impact of advertising expenses incurred by the seller.

Market segmentation can be done on the following basis:

Demographic segmentation:

Segmentation is done on the basis of gender, income, age, educational qualification, profession etc. The segmentation can include one factor or several factors in combination. For instance, music downloads are tend to be targeted to the young, while hearing aids are targeted to the elderly; some products are targeted only to women and others only to men.

Geographic segmentation:

Markets can be segmented on the basis of its geographic width, maybe globally or even on local basis. In many situations the needs of potential customers in one geographic area are different from those in another area. This may be due to climate, custom, or tradition.

Price segmentation:

A market can be segmented on the basis of variable prices charged. A same product can be sold at two different prices depending on varying income levels, geographical differences, etc.

Lifestyle segmentation:

The market is segmented on the basis of customer attitude, behavior, emotions, habits, interests, perceptions, speculation etc. This technique is particularly useful for the service industry and lifestyle products.

Time segmentation:

This is based on market dependency on the time factor. It could be on the basis of seasonal demand fluctuations, weekday and weekend fluctuations, or even daily fluctuations.