Market Segmentation - Dividing a Market of Potential Customers into Groups

Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. Examples of market segmentation can be found in the products, marketing and advertising that people use every day.

Market segmentation is important for marketers because market segmentation makes it easier for marketers to personalize their marketing campaigns. By arranging their company’s target market into segmented groups, rather than targeting each potential customer individually in market. Customers together allows marketers to target specific audiences in a cost effective manner. It also reduces the risk of an ineffective organization. It can be easier to complete against existing firms by focusing upon a smaller market in the group of consumers. The two way firm that can segment consumer are listed below with brief description:-

Demographic segmentation: Demographic segmentation is one of the simplest and widest type of market segmentation used. Most companies use it to get the right population in using their products. Segmentation generally divides a population based on variables. For examples: Audi and BMW have high prices so it targets high buyers.

Psychographic segmentation: Psychographic segmentation is one which uses lifestyle of people, their activities, interests as well as opinions to define a market segment. It is quite similar to behavioral segmentation. But Psychographic segmentation also takes the psychological aspects of consumer buying behavior. For example: There is this rich businessman who wants to have a fit body and lead a healthy lifestyle. He, however, does not have the time to reduce his excessive weight.