Market Segmentation

Have you segmented your market by customer type?
A. No. Isn’t a customer a customer?
B. We acknowledge that all customers are not the same and have some idea of differences in types of customers. 
C. We have some information on the different types of key existing and key potential customers.
D. We have a comprehensive list of the different types of key existing and key potential customers.
E. We have methodically catalogued – independently facilitated – a comprehensive list of the different types of key existing and key potential customers.
[Score:  A=0, B=1, C=2, D=3 and E=4]
Why is this question important?

Market segmentation is a marketing concept which divides the overall market set up into smaller subsets comprising of consumers with a similar taste, demand and preference.

A market segment is a small unit within a large market comprising of like-minded consumers.

Each market segment is unique and distinct from the other segments.

A market segment comprises of consumers who have similar interests, values, needs, preferences, likes, etc. and they tend to respond in a similar way to the fluctuations in the market.

Market segmentation is about understanding the needs of your customers and, therefore, how they decide between one offer and another. This information is used to group customers who share the same or very similar needs and wants criteria.  You are then able to ascertain which groups of customers you can best serve and which product or service offerings will best meet their needs.

Basis of Market Segmentation

  • Gender – important in many industries like cosmetics, footwear, jewellery and apparel industries.
  • Age Group – marketing strategies for teenagers would be different than for the over 65’s.
  • Income – high income, mid-range and low income groups – retail outlets  catering to the higher income group would have different range of products and strategies as compared to stores which target the lower income group
  • Marital Status – travel tour operators would tend to have different holiday packages for bachelors and married couples.
  • Occupation – white collar workers  would have different needs to to school / college students.

Types of Market Segmentation

Psychographic segmentation

The basis of such segmentation is the lifestyle of the individuals. The individual’s attitude, interest, value help the marketers to classify them into small groups.

Behaviouralistic Segmentation

The loyalties of the customers towards a particular brand help the marketers to classify them into smaller groups, each group comprising of individuals loyal towards a particular brand.

Geographic Segmentation

Geographic segmentation refers to the classification of market into various geographical areas.

The primary purpose of segmentation, therefore, is to identify how to get and retain profitable customers.


Segmentation, effectively applied, has a number of immediate and distinctive advantages. It will help you to:

  • identify your most and least profitable customers
  • focus your marketing activities on the customers who are most likely to buy your products or services
  • avoid markets which may not be profitable
  • develop enduring relationships
  • enhance customer care
  • outperform the competition
  • use your resources shrewdly
  • identify new products
  • improve products or services to meet customer needs
  • in some instances enabling you to charge a higher price for your products and services to certain segments