Market Segmentation

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What Is Market Segmentation?

Market Segment: a subdivision of a market with distinctive characteristics, bigger than a niche

Variations in the characteristics of products are frequently so markd that it makes sense to subdivide a market into segments.

From a new firms perspecive, it can make sense to target a small segment or niche, which is relatively neglected.

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Segments of a Market

The main consumer market segmentation characteristics are:

  • Age (often by age groups)
  • Gender and sexual orientation
  • Location (where people live)
  • Social Class (linked mainly to occupation)
  • Income 
  • Behavior (spending patterns, brand loyalties, buying habits)
  • Psychological (lifestyle, attitudes, personality, values)
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Niche Market

Niche Market: a small section of a market with distinctive specialised requirements

A niche market has a USP because there are not many competitors that provide the same good/service that that business does. Because of this, a business can usually charge a high price for the good/service as people will still be willing to pay that amount as that is one of the only places they can buy what they are looking for.

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