For a group or an individual to be considered as a market, they must have a want or a need and have the ability and willingness to buy.
A segment of the market is individuals that have similar characteristics, meaning they have similar product needs. Market segmentation is therefore organising people into these segments in order that a marketing mix can be created that satisfies both parties.
Benefits of Segmentation:
- Opportunities in markets can be found.
- Resources can be allocated to specific areas more effectively.
- Customer needs can be better defined.
Factors of Segments:
- Substantiability: They must be substantial enough to warrant making a new marketing mix for, as this will mean new resources and promotions etc.
- Identifiable: The people in the market must be easily identifiable. It is hard to target a market with personal matters such as homosexuality, as many homosexuals may not own up to being one.
- Accessibility: The area you are selling to must be accessible and functional.
- Responsiveness: If the new market respnds the same to the product as other markets, there is no need for a new marketing mix.
Types of Segmentation:
- Geogrsphical: Region, size, density (per unit of land) and climate.
- Demographic: Age, gender, ethnicity, family life cycle (maritial status, children etc.) and income.
- Psychographic: Personality (traits, attitudes and habits), lifestyle (beliefs, lesiure, importance of things), motivations (people ratinales e.g. status, practicality). These are usually used alongside demographics.
- Benefit sought: Grouping people by the benefits they want from a product.
- Usage sought: Splitting the market by how much of the product people will buy. This is followed by the 80/20 principle, which…