There are several approaches that retailers can use to segment the market. Some of the main approaches include geographic segmentation which divides customers based on where they live, demographic segmentation which groups customers based on attributes like age, income and education, and lifestyle segmentation which considers how customers spend their time and money. Often the best approach is to use composite segmentation which combines multiple variables like benefits sought, lifestyles and demographics to more accurately identify customer segments.

1. Market Segmentation

2. A retail market segment is a group of customers whose needs are satisfied by the same retail mix because they have similar needs.

3. Criteria for Evaluating Market Segments Actionable The defined segment clearly indicates what the retailer should do to satisfy its needs Identifiable The retailer is able to determine which customers are in the segment Substantial A segment must be large enough or have significant buying potential Reachable The retailer can target promotions and other marketing information to consumers in the segment

4. Approaches for Segmenting Markets No approach is best for all retailers so they must examine various factors and determine which are most important.

5. Geographic Segmentation This is when customers are group according to where they live. A segment can be a country or a segment within a country, such as states, cities, and neighborhoods.

6. Demographic Segmentation This is where consumers are grouped by easily measured, objective characteristics such as age, gender, income, and education

7. Geodemographic Segmentation This is where both geographic and demographic characteristics are used to group consumers into market segments

9. Lifestyle Segmentation This type of segmentation uses how people live, spend their time and money, as well as their activities and opinions for dividing the market

11. Buying Situation Segmentation Retailers may use buying situations as a way to segment the market

12. Benefit Segmentation This is where retailers group customers seeking similar benefits into a segment.

13. Composite Segmentation Because no approach meets all the criteria for useful customer segmentation retailers often use multiple variables to identify customers . This is known as composite segmentation and is based on benefits sought, lifestyles, and demographics.