10 market segmentation

• market segmentation - dividing customers within a market into smaller groups with common needs or wants, then finding product or service that fulfils them
• customers can be divided by:

  • location
  • income
  • lifestyle
  • age
  • other demographic factors
• regional changes in taste make it possible to find gaps in the market that cannot easily be filled by large companies, ie. a large company would not be interest in targeting a small percentage of the uk population, but a small local business would
• businesses like to segment markets because they can charge higher prices for carefully tailored products
• other demographic factors:

  • gender eg. books, toiletries, clothes
  • race eg. cosmetics, music, eating out
  • religion eg. music, clothes
• segmentation leads to good choice for customers. the better a product meets consumer needs, the more they are willing to pay for it, enabling businesses to make more profit to pay for product development