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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