Marketing segmentation - introduction

Author: Jim Riley  Last updated: Sunday 23 September, 2012

Markets consist of customers with similar needs. For example, consider the wide variety of markets that exist to meet the following needs

• Eat
• Drink
• Exercise
• Travel
• Socialise
• Educate

As you can imagine, such markets (if they were not further divided) would be very broad.

Customers in a market are not the same. For example, within the market to provide meals, customers differ in the:

• Benefits they want
• Amount they are able to or willing to pay
• Media (e.g. television, newspapers, radio stations) they see
• Quantities they buy
• Time and place that they buy

It therefore makes sense for businesses to segment the overall market and to target specific segments of a market so that they can design and deliver more relevant products and services

A market segment can be defined as follows:

A customer group within the market that has special characteristics which are significant to marketing strategy

Segmentation is most often applied to markets, but it is equally relevant to distribution channels and customers. However, similar principles of how to segment apply to all three.

Overall definition of segmentation

Segmentation involves subdividing markets, channels or customers into groups with different needs, to deliver tailored propositions which meet these needs as precisely as possible.

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