Market Segmentation and the reasons forBreaking down a large market into subgroups or sections that are likely to respond to products in different ways• Market research identifies different groups (segments) of people within the market• These groups can then be targeted individually increasing the effectiveness of the firms marketing (e.g. promotional campaigns, product versions)• Increasing effectiveness means reducing cost and maximising return• Gaps in the market can be found• Niche markets can be found (a smaller market within the whole [mass] market made up of a specific segment of the market)• Enhances the development of marketing strategies (plan to achieve marketing objectives)
Ways to segment the marketGeographical Where people live. People from different areas of the country respond differently to products.Lifestyle Interests and hobbies and how these impact of the products they demand.Age Firms often product numerous versions of the products which appeal to different age ranges.Gender Products aimed at both genders can be specifically tailored through packaging or styling.Social Class Occupations. However incomes and products purchased are not always in direct relation. A (upper class: doctors, lawyers) – E (unemployed: pensioners, on benefits).Residence Type of housing they live in. ACORN: A Classification of Residential Neighbourhoods. Allows firms to target those living in flats differently to those in large detached houses.Behaviour Spending patterns. Certain groups behave differently on different days.
Market SegmentationBenefits Drawbacks • Difficulty in identifying• To increase market the most important share segments for a product• To assist product • Reaching the chosen segment with development marketing• To extend products • Recognising changes into new markets in the segments interested in the• To identify ways of product marketing a • Meeting the needs of product customers not included in the chosen segment