Market

Segmentation
Market segmentation
• Market segmentation is the process of dividing the market in
to sections based on similar consumer characteristics and
needs.

• There can be three main types of market segmentation

• Geographic
• Demographic
• Psychographic
Geographic segmentation
• This is where different users living in different geographic
regions may have different tastes or requirements
• True Temper selling snow shovels in countries with cold
temperatures
• Halal make up sold in the emirates
• Green tea Kitkat in China
Demographic segmentation
• Demographic segmentations is where consumers are divided
based on their demographics
• This can be done according to
• Age
• Gender
• Income
• Ethnicity
• Religion
• Consumer is segmented according to
• Age
• Johnsons targets both toddlers and babies
• Anchor divides its milk powder according to
different age categories
Demographic segmentation
• Gender segmentation
• Income levels
• First class travel vs. economy class travel
• Ethnicity
• Religion
Psychographic /Life style
segmentation
• Consumer groups are identified according to their life style
and attitude
Psychographic segmentation
• According to the state of mind.
• Depressive chocolate eaters
• Energetic chocolate eaters
• How Volvo advertises using the state of mind of consumers
Benefits of segmentation
• Market Share increases - Wider range of consumers

• Kellogg targets many segments

• Increasing the consumer base
• Revenue and profits increase
Benefits of segmentation
• Correct target consumers can be channeled
• Volvo – targets family cars
• As well as off road cars
through the right channels so
that consumers can be targeted
correctly.

This prevents them from

spending unnecessarily on
wrong kind of advertising
Limitations of segmentation
• It can be costly as research has to be done before segmenting

• Dividing the market in to segments and providing different

products can be difficult to control and implement
• Consumer satisfaction increases as the consumers
requirements are captured

• Baskin Robins have 31 flavours of

ice cream to represent each day of the month
• This is likely to cater to each consumer
Specifications, increasing consumer satisfaction
Check your knowledge
• What is ‘Market segmentation’
• What are the main types of segmentation
• What is geographic segmentation
• Give an example of geographic segmentation
• What is demographic segmentation
• Give an example of a psychographic segmentation
• Identify 3 ways that can be used when segmenting clothes
• Identify 3 benefits of segmentation
• Identify 2 limitations of segmentation