Market segmentation means taking the market and dividing it into smaller units, which we call ‘segments’. Each group or segment must be different in some way.
A business must analyse the needs and wants of different market segments before determining ITS own niche. This means looking in detail at potential segments and identifying what they really want.
You can segment your market at any time when you suspect there are significant, measurable differences in your market. Look at the different segmentation methods below and identify how your current market operates and what segments you could create.
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Segmentation by |
What this means |
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Demographics |
Age, gender, income, ethnicity, marital status, education, household size, length of residence, type of residence, profession or occupation. |
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Psychographics |
Personality and emotionally based behaviour linked to purchase choices, attitudes, hobbies, risk aversion, personality and leadership traits, magazines read, TV watched. |
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Lifestyle |
Vacations, hobbies, entertainment, other non-work time pursuits. |
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Life stages |
Chronological benchmarking of people's lives at different ages. |
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Belief and value systems |
Religious, political and cultural beliefs and values. |
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Geography |
Country, region, area, metropolitan or rural location, population density, climate. |
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Benefit |
The use and satisfaction gained by the customer. |
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Behaviour |
The nature and frequency of the purchase, brand loyalty, usage level, benefits sought, reaction to marketing messages. |
See also:
Q9 How do we find customers?
Q30 How do we research the market?
Q115 How do we position our business?
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For effective market segmentation, the market must be large enough to justify segmenting because, if the market is small, segmentation may make it smaller, giving segments too small for effective marketing. Measurable differences must exist between segments and the anticipated profits must exceed the additional costs.
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