Market Segmentation Term Meaning

Market Segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on some type of shared characteristics. This allows businesses to tailor their marketing strategies to specific segments, improving the effectiveness of their efforts.

Detailed Explanation

Market Segmentation involves identifying different groups within a market that share similar characteristics and needs. The purpose is to enable businesses to target each segment more effectively with products, services, and marketing messages that are most relevant to them. Common bases for segmentation include demographic, geographic, psychographic, and behavioral factors. For example, demographic segmentation might consider age, gender, income, and education level, while psychographic segmentation might consider lifestyle, values, and personality traits. By understanding the specific needs and preferences of each segment, businesses can develop tailored marketing strategies that resonate with their target audience, leading to increased customer satisfaction and loyalty. Effective market segmentation helps businesses allocate their resources more efficiently, optimize their marketing efforts, and ultimately drive better business results.

Key Points

• What it is: The process of dividing a broad market into sub-groups of consumers based on shared characteristics to improve marketing effectiveness.
• Why it matters: Allows businesses to tailor their marketing strategies to specific segments, improving customer satisfaction, loyalty, and overall business results.
• How to use it: Identify segments based on demographic, geographic, psychographic, and behavioral factors. Develop tailored marketing strategies that resonate with the specific needs and preferences of each segment.

Examples

1. Demographic Segmentation: A clothing retailer segments its market by age and gender, creating different marketing campaigns and product lines for men, women, teens, and children.
2. Behavioral Segmentation: A software company segments its market based on user behavior, targeting frequent users with premium features and less active users with basic features and tutorials.

Related Terms

• Target Market
• Customer Segmentation
• Market Analysis
• Marketing Strategy