Grade 8 : Market Segmentation (Posted by Anang on 20 May 2009)

INTRODUCTION
Market research provides a wide variety of information about the people who may be interested in buying a business’s products. For example it might tell a business that a new chocolate bar will mainly be bought by people aged 16-25. It might indicate that older people have bought more of magazine than younger people in the last year.

Producers may use this information to identify people with similar needs.
Breaking down a market into sub-groups with similar characteristics is known as MARKET SEGMENTATION.
A businesses can target these groups and develop products and services for each of them.

Segmentation by age
Many businesses pay attention to the age of their customers.
E.g. Holidays packages and Retirement program for 60s.

Segmentation by Gender
Manufacturers may target either males or females.
E.g. Mobile phone manufacturers target a growing number of females buying the latest ‘technological gadgets’ by designing accessories to suit their requirements.

Segmentation by level of education or occupation
The market usually divided into those who have or have not studied at higher education level.
E.g. A magazine aimed at those with certain qualifications.

Segmentation by social class
Markets are often divided by social class.
E.g. VIP room in 5 stars hotel is aimed to Higher social class people.

Segmentation by income
It’s different with social class. E.g. A self-employed skilled worker (electrician) may receive the same income as a middle manager, however because of his/her occupations the two people will be in different social class.

Segmentation by religion
Businesses may divide markets by religious groups.
E.g. Christian Television channel in the UK

Segmentation by ethnic group
Market can be segmented by country of origin or ethnic group.
E.g. Clothing and hair accessories for African-caribbean groups.

Segmentation by family characteristics
The features of entire families may be used to segment the market.
E.g. Young singles, married with no children.

Segmentation by political voting preference
E.g. Clothes with SBY pictures or Democrate Party aimed at SBY fans and voters.

Segmentation by geographical region
This might include considering the region of a country that consumers live in and the nature of the region, e.g. Rural, urban, semi-rural or suburban. It may also consider the type of house, road or area of a city that people live in.

Segmentation by personality and lifestyle
Consumers are sometimes classified according to their psychological characteristics.
E.g. Sports products

Segmentation by purchases
This segments consumers according to their behaviour when purchasing a product.
E.g. British airways established ‘Executive Club’ to the customers.

Uses of Segmentation
Why might a business attempt to identify different market segments?
-The information would allow it to sell more products and increase its profit.
-have greater knowledge about the customers and produce products to suit their needs better.
-To target particular groups with particular products.
-To prevent products being promoted to the wrong people.

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