Market Segmentation and Its Types

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MARKET SEGMENTATION AND ITS TYPES Table of Contents Definition 3 Steps in Segmentation Process 3 Segmenting Consumer Markets 3 Geographic Segmentation 4 Demographic Segmentation 5 Psychographic Segmentation 5 Behavioral Segmentation 5 Using Multiple Segmentation Bases 6 Bibliography 8 Definition Market segmentation is essential for creating value of the product in the minds of customers and consumers. Market segmentation is the process of dividing the target market into subgroups of people who are homogeneous in respect to their needs and wants. The people in each subgroup are expected to react in similar way towards a product or service (Kumar & Sharma, 1998). A product can be divided into two types; consumer product and industrial product. Market segmentation of consumer products is done on the basis of age, sex, education, income etc. Where, segmentation for industrial products is based on size of the business, location, procedure and purchasing etc. (Bose, 2006). According to Bose (2006) market segmentation is effective when company can reach segments for promotion and distribution, the segment is large enough to generate sufficient profits, buying power of the targeted segment is measurable and there is a noticeable variation in the nature of demand. Steps in Segmentation Process Identify the total market Determine the segmentation dimensions Profile each segment Measure segment attractiveness Select target market Determine marketing
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