Market segmentation is a marketing strategy that divides consumer"s interests, demographics and actions into various teams to much better industry to certain requirements.

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Market segmentation is a marketing strategy that divides consumer"s interests, demographics and habits into different teams to much better industry to particular needs.

When it concerns marketing, there is a plethora of methods providers employ to finest existing their product as the solution to consumer's demands. One of the the majority of standard marketing tools is market segmentation, which enables companies to group off different kinds of consumers with differing needs, demographics or distinct responses to products and also much better targain their specific wants. 

So, what actually is sector segmentation, and how does it work? 

What Is Market Segmentation?

As a marketing strategy, market segmentation is designed to help suppliers better sector to teams that they will certainly have the most success at meeting their requirements. Market segmentation helps providers develop a sector mix that enables them to taracquire their marketing campaigns to audiences that are more most likely to need their product - and also, possibly find under-offered segments to branch out to. 

By more directly targeting their vital markets, providers are able to be even more effective via their resources - including money and also time - as soon as mounting campaigns to attract brand-new customers. 

Market Segmentation Definition

Market segmentation is the process of dividing prospective consumers into various groups depending on determinants choose demographics, actions and various features. Market segmentation helps service providers better understand also and industry to particular groups of consumers that have actually equivalent interests, requirements and habits.

In each market segment, tright here are generally three things that are widespread to all segments - homogeneity, distinctiveness and also reactivity.

In each individual team, the potential customers are mostly homogeneous - interpretation they are generally reasonably similar in terms of their common needs. Furthermore, the members of each individual grouping are distinct from the various other teams - or, they are different in some ways than customers in other groupings. Lastly, consumers in each team have equivalent (or relatively similar) reactions to various marketing, proclaiming and products directed at their segment, and also tend to perceive the full worth of assets differently than others in various teams. 

Factors of Market Segmentation 

What goes right into the process of sector segmentation? 

Tbelow are numerous determinants that a company or service will certainly have to research throughout the sector segmenting procedure - consisting of just how available the segments are and specific identification parameters.

For instance, providers should have the ability to clearly determine various segments of potential consumers. In addition, the measurability of the segment's dimension is crucial to understand also exactly how ideal to setup a strategy, as is the segment's availability concerning promotional or marketing products. 

In addition, to assistance the strategy, the strategy should be correct for the resources of the certain company and in line with their policies. 

Types of Market Segmentation

But what kinds of sector segmentation are there? How deserve to providers divide their prospective markets? 

In general, tbelow are 4 basic kinds of sector segmentation (via some variation in them) - behavioral, demographic, psychographic and geographical. 

1. Behavioral

As the name may imply, behavioral sector segmentation is focused on how consumers connect via a product, or how a lot they understand around a product. 

For instance, behavioral segmentation might include what brands consumers are loyal to, exactly how sensitive consumers are to certain prices, their usage or certain decision-making processes. Behavidental also consists of occasion, engagement and also life cycle. 

Behavidental marketing is often employed many throughout Christmas or holiday shopping periods as soon as customer actions is somewhat transformed. 

2. Demographic

One of the significant means to segment the industry is by demographics. Marketers frequently segment consumers into teams based on comparable age, sex, household size, religious beliefs, nationality, earnings and education level. These are often beneficial methods for businesses to much better assess what might interest their prospective consumers and also much better targain them based on even more narrowed needs. 


An example of demographic sector segmentation could be marketing a retirement business to older citizens. 

3. Psychographic

With psychographic segmentation, companies study consumer's lifelayouts, personality, interests, opinions, social class, actions and also tasks to better asspecific their requirements. 

For example, a consumer that is very energetic with outdoor activities prefer camping, hiking and also skiing would certainly even more most likely be interested in tents, hiking boots and also ski shoes than someone that spends several time reading indoors. In marketing, much of this information is procured with surveys or other information that give a company a better photo of a consumer's lifestyle and interests to better taracquire their certain niches. 

4. Geographic

Geographic indevelopment about consumers deserve to be very helpful (and also even essential) to marketing to the ideal teams. Geographic sector segmenting takes right into account what country, region, city or location a potential customer lives in. However before, it may also incorporate the thickness of a city, population, climate and also language to aid better team consumers. 

For instance, marketing to Spanish-speaking consumers would be incredibly different than marketing to English-speaking consumers. Or, a company selling heaters would likely need to know wright here their customers in colder climates were as opposed to those in warmer climates who might have much less need of their product.

Market Segmentation Examples 

Here are some actual examples of industry segmentation. 

One example of industry segmentation in activity is Victoria's Secret and also their teenage-targeting brand also PINK. Victoria's Secret mostly targets womales, while their brand also PINK is targeted even more toward teenage girls and also women. However, the brand also has actually additionally lengthy marketed itself to guys - generally husbands or boyfriends of women that are looking to purchase gifts. Given the brand's pricing, Victoria's Secret also targets a fairly wealthy segment through additional income to spfinish on lingerie or mid-price underapparel. 

Apple (AAPL) - Get Apple Inc. (AAPL) Report has made its fortune by segmenting the all at once electronics sector into generally early on adapters and rich market segments. 

Another excellent instance of sector segmentation is the banking sector - like Wells Fargo (WFC) - Get Wells Fargo & Company kind of Report or JP Mbody organ Chase (JPM) - Get JPMbody organ Chase & Co. (JPM) Report . Both are huge financial institutions via a multitude of various assets that call for market segmentation to best industry them individually. For example, JP Mbody organ Chase would not likely market 401(k)s or IRAs to college-aged customers - rather, banks may focus on a 30- to 40-year-old demographic, or also senior citizens. 

Furthermore, certain food brands or grocery stores prefer Whole Foods commonly segment their sector into even more health-mindful consumers who are willing to pay more for organic or naturally-sourced food assets and also groceries. 

While the list goes on, industry segmentation may incorporate multiple forms of segmentation (like geographical or behavioral) and also cover a broad array of requirements. 

Benefits of Market Segmentation 

While industry segmentation is, in essence, crucial to a business' success in concentrating their resources on marketing to the right teams, there are several various other benefits of sector segmentation.

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For one, industry segmentation helps providers zero in their resources on locations wbelow they have actually a much better possibility of success. Instead of marketing to an entire group of human being in need of jackets, a sportswear agency favor Nike (NKE) - Get NIKE, Inc. (NKE) Report could industry to civilization in require of water-resistant running jackets - that would certainly most likely fall right into a sporty, energetic way of living sector segment. 

Anvarious other significant advantage of market segmentation is its usefulness in helping companies narrow their message to be even more distinctive for certain consumers. Instead of sending out generic, mass marketing messperiods or proclaiming, market segmentation enables providers to customize messages to niche audiences that are even more most likely to be in require of the certain product that company is providing. This deserve to increase customer acquisition via advertising and keep expenses lower. 

Market segmentation likewise helps suppliers identify underoffered sectors that may have the ability to assist them expand also right into new territory - and thrive their profits.

In fact, according to a 2008 research by Bain & Company type of, 81% of executives attributed sector segmentation as an important component to prospering earnings. 

Given its numerous advantages, sector segmentation is a significant marketing strategy used by the most successful service providers.