Segmentation of the market is a process of division of the market(consumers) into groups according to certain characteristics. The main goal of this action is to study the reaction of a particular group to a particular product, as well as the choice of the target (main) market segment. Segmentation of the market takes a dominant position in any marketing research of the client base of the company.

segmentation of the market is

Why market segmentation is needed?

Any company works for its customers. Naturally, they all differ in one way or another from each other. Segmentation of the market is a process of highlighting certain parameters that distinguish one group from another. One buyer from another can distinguish his place of residence, habits, social status, religious views and even attitude to life. Taking into account all these differences, the company can produce products different for each segment. Each group is naturally different from each other. One of the differences is their number. Many firms focus their attention only on the largest group. Although there are many companies that focus on one narrow segment. This allows them to avoid great competition and have regular customers. Segmentation makes it possible to study better their customers, as well as to identify which groups do not use the services of a particular company. Thus, segmentation of the market is an integral part in the activities of any company. This phenomenon is based on certain principles.

market segmentation example

Principles of market segmentation

Segments can differ by several criteria:

  1. Geographically. Consumers can be divided into urban and rural populations, as well as by place of residence - by regions, cities and even countries.
  2. On the demographic basis. The most common is the separation of potential clients by age, income level and marital status. Among the additional: religion and occupation.
  3. On a psychographic basis. Division of consumers is carried out on the basis of features of the certain person. There are various methods for determining the psychographic type of a person, according to which the market segmentation takes place. Example: you can refer a person to one of two groups - to psychocentric or allocentric.

Among other attributes, consumers can be identified by their attitude to products, by consumption style and by personal characteristics.

How to select segments

principles of market segmentation
The choice of this or that product can not be affected byonly one age of consumers, but also, for example, income level or geographical location. Therefore, the more criteria will be allocated in the study of consumers, the clearer the whole situation in the market will be visible. At the same time, a large number of signs significantly complicates the situation. Simply put, the more segments, the fewer consumers in each group. How to allocate segments and by what parameters, depends on the individual characteristics of the enterprise.

Thus, market segmentation is a process that must take place according to a certain scheme, depending on the objectives of the enterprise.