Segmentation and Why We Do It

Orange SlicesKnow your market is a mantra for marketing professionals whether you are working on your market surveys online or doing traditional research. Sellers and advertisers want to be able to determine what the potential market is for their product or service, as well as the best ways to reach potential consumers. In order to know the potential market, they must identify the characteristics of individuals likely to be interested in that particular product or service, establish how many such individuals there are, as well as study how these people behave and respond to particular advertising approaches.

Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action. Market segments are the relative homogeneous groups of prospective buyers that result from the market segmentation process. Each market segment consists of people who are relatively similar to each other in terms of their consumption behavior.

There are many ways that a segment can be considered. For example, the auto market could be segmented by: driver age, engine size, model type, cost, and so on. However the more general bases include:

• By geography such as where in the world was the product bought
• By psychographics such as lifestyle or beliefs
• By socio-cultural factors such as class
• By demography such as age, sex, and so on

If done properly segmentation can help to insure the highest return for your marketing/sales expenditures.
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