Market segmentation

• Market segmentation


  Market segmentation occurs when the market is split into subgroups of consumers with similar characteristics.

  Helps to identify different types of consumers different wants and needs so managers can target specific individuals with products or services.
• Demographic


  identifies sub-groups of the population based on their demographic profile or characteristics.

  e.g. Age, gender, level of education, race, religion, family, size, income, stage in life.
• Geographic


  Defines market categories based on where people live.

  e.g. regions, cities, neighbourhoods
• Behavioural


  Behavioural patterns of the consumer rather than their characteristics.

  e.g. reasons for making purchases, frequency of purchase, time of purchase, brand loyalty, method of purchase, triggers.
• Psychographic


  Based on their personalities and interests

  e.g. personality traits, hobbies, life goals, values and morals, lifestyle
• Why are markets segmented?

  • Allows business to produce goods / services that are precisely targeted at specific needs of consumers.
  • Reduces wastage on marketing
• Problems with segmentation


  • Risk of leaving out other groups
  • Takes time and money to do market research in order to segment.
  • Possible to misjudge who their target market actually is