Market Segmentation

Market segmentation is the practice of dividing an overall market into subsets of customers who share similar characteristics and needs, so that a business can match its products and marketing more closely to one or more of those groups. It sits near the middle of a range of strategies that runs from mass marketing, where a single product is offered to everyone, to one-to-one marketing, where a different product is designed for each person. Firms choose segmentation bases to define the groups. Descriptive bases cover demographic and geographic traits such as age, income and region, behavioral bases cover lifestyle, brand loyalty and usage rate, and benefit bases ask which main benefit buyers seek. A usable segment must be measurable, large enough, reachable, responsive and stable. The approach can cost more, since it needs market research and gives up some economies of large production runs, but it is vital where consumers have diverse needs.