5.5

• Market segmentation

  •Few businesses can sell their products to

  the entire market – so a business will divide

  the total market for its products into district

  market segments.

  •Dividing a total market into groups who

  share one or more common characteristics

  is known as market segmentation

  •The elements used to identify market

  segments are known as market dimensions –

  most identify 4 such dimensions:

  demographic, geographic, psychographic,

  and behavioural
• Target Market Selection

  Once the market has been segmented, the business selects one of these segments to become the target market.A business selects a target market so it can direct its marketing strategies to that group of customers, rather than the

  total market.
• Target Market Selection Cont.

  Sometimes, a business may be able to identify both a

  primary target market and a secondary target market.

  • A business’s primary target market will generate most of

  its revenue. These are the customers who are loyal to a

  particular business and make repeat purchases.

  • The secondary target market should not, however, be

  ignored, for while the number of customers may be

  small, it does provide an alternative in case there is a

  loss of customers from the primary target market.
• Niche Market

  An extension of the market segmentation approach is that

  of the niche market (otherwise known as a ‘micro-market’)

  Such businesses market to a narrow, specific customer

  base.

   The needs of customers in these markets are often

  neglected by large businesses because it is rarely

  profitable for them to alter their marketing mix for very

  small groups.
• Market segmentation divides the

  consumer market according to

  demographic, geographic,

  psychographic and behavioural

  dimensions.

  • A business will usually select a

  particular segment to become its

  target market.

  • The target market provides the major

  source of revenue, while smaller, less

  significant segments may make up the

  secondary target market.

  • A business may also target a niche

  market