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Market segment

Market Segmentation is the process of grouping a market into smaller subgroups. This is not something that is arbitrarily imposed on society : it is derived from the recognition that the total market is often made up of submarkets (called segments). These segments are homogeneous within (ie.: people in the segment are similar to each other in their attitudes about certain variables). Because of this intra-group similarity, they are likely to respond somewhat similarly to a given marketing strategy. That is, they are likely to have similar feelings about a marketing mix comprised of a given product, sold at a given price, distributed in a certain way, and promoted in a certain way.

The requirements for successful segmentation are:

  • homogeneity within the segment
  • heterogeneity between segments
  • stability of segments
  • segments are measurable and identifiable
  • segments are accessible and actionable
  • segment is large enough to be profitable

The variables used for segmentation include:

  • Geographic Variables
    • region of the world or country
    • country size
    • climate
  • Demographic Variables
    • age
    • gender
    • sexual orientation
    • family size
    • family life cycle
    • income
    • occupation
    • education
    • socioeconomic status
    • religion
    • nationality
  • Psychographic Variables
    • personality
    • life-style
    • values
    • attitudes
  • Behavioural Variables
    • benefit sought
    • product usage rate
    • brand loyalty
    • product end use
    • readiness-to-buy stage
    • decision making unit
When numerous variables are combined to give an in-depth understanding of a segment, this is referred to as depth segmentation. When enough information is combined to create a clear picture of a typical member of a segment, this is referred to as a buyer profile. A statistical technique commonly used in determining a profile is cluster analysis.

see also: marketing, target market, consumer behaviour[?]

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