Market Segmentation

Market Segmentation is the process of dividing the market into sub-markets of

customers with similar needs.

Bases of Segmentation

This means the way a market can be divided up.

 Age
 Gender
 Lifestyle
 Income / Class
 Work
 Family Size
Market Segmentation is often
 Education
likened to cutting up a pie, a cake or
 Location in this case an orange.
 Religion/Ethnicity

Benefits of Segmentation

To answer this question we can again use the Marketing Mix (the 4 Ps) to help.

Product

 Products can be developed to suit the needs of a particular market

segment.

Price

 Can charge premium pricing.

 Allows price differentiation for different market segments.

Place

 The place products are sold at will be appropriate for the particular
segment.
Promotion

 Advertising can be specific for certain segments.

 Promotional offers can be targeted to specific segments
 Direct mailing (flyers or emails) can target customers who are more likely
to be interested in the product

We can also look at the other benefits of Market Segmentation:

 It creates and promotes customer loyalty

 It strengthens an organisation’s competitiveness and their advantage over
rivals
 By keeping wasteful costs low you can increase your profit margins

Some examples of Market Segmentation:

Satellite TV doesn’t have just a couple of channels for everyone.

Think about the kind of person who would watch:

 Sky Sports
 History Channel
 UK Living
 Nickelodeon

1. What gender would they be?

2. How old would they be?
3. What is their income likely to be?
4. If they like this channel, what other interests do they have?

It is from this that successful marketing campaigns can begin.