Market Segmentation
| Author | Earl Meyer, Patrick Graham |
| Pages | 487-489 |
Page 487
Market segmentation is one of two general approaches to marketing; the other is mass-marketing. In the mass-marketing approach, businesses look at the total market as though all of its parts were the same and market accordingly. In the market-segmentation approach, the total market is viewed as being made up of several smaller segments, each different from the other. This approach enables businesses to identify one or more appealing segments to which they can profitably target their products and marketing efforts.
The market-segmentation process involves multiple steps (Figure 1). The first is to define the market in terms of the product's end users and their needs. The second is to divide the market into groups on the basis of their characteristics and buying behaviors.
Possible bases for dividing a total market are different for consumer markets than for industrial markets. The most common elements used to separate consumer markets are demographic factors, psychographic characteristics, geographic location, and perceived product benefits.
Demographic segmentation involves dividing the market on the basis of statistical differences in personal characteristics, such as age, gender, race, income, life stage,
Figure 1
The market segmentation process
Page 488
occupation, and education level. Clothing manufacturers, for example, segment on the basis of age groups such as teenagers, young adults, and mature adults. Jewelers use gender to divide markets. Cosmetics and hair care companies may use race as a factor; home builders, life stage; professional periodicals, occupation; and so on.
Psychographic segmentation is based on traits, attitudes, interests, or lifestyles of potential customer groups. Companies marketing new products, for instance, seek to identify customer groups that are positively disposed to new ideas. Firms marketing environmentally friendly products single out segments with environmental concerns. Some financial institutions attempt to isolate and tap into groups with a strong interest in supporting their college, favorite sports team, or professional organization through logoed credit cards. Similarly, marketers of lowfat or low-calorie products try to identify and match their products with portions of the market that are health- or...
To continue reading
Request your trial