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.

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)

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.