Market segmentation

In <a href="/facts/Marketing/LttVQ66t">marketing</a>, market segmentation or customer segmentation is the process of dividing a consumer or business <a href="/facts/Market_(economics)/6RfCU3fH">market</a> into meaningful sub-groups of current or potential <a href="/facts/Customer/oGqcqmhf">customers</a> (or <a href="/facts/Consumer/dMflnQGX">consumers</a>) known as segments. Its purpose is to identify profitable and growing segments that a company can target with distinct marketing strategies.
In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles, or even similar <a href="/facts/Demographic_profile/k8gAspp0">demographic profiles</a>. The overall aim of segmentation is to identify high-yield segments – that is, those segments that are likely to be the most profitable or that have growth potential – so that these can be selected for special attention (i.e. become <a href="/facts/Target_market/rDIBblIg">target markets</a>). Many different ways to segment a market have been identified. <a href="/facts/Business-to-business/9vKUQSmL">Business-to-business</a> (B2B) sellers might segment the market into different types of <a href="/facts/Business/For1e8Nh">businesses</a> or <a href="/facts/Country/hormuwdR">countries</a>, while <a href="/facts/Business-to-consumer/4y8sfDHf">business-to-consumer</a> (B2C) sellers might segment the market into <a href="/facts/Demography/VktYwWUD">demographic</a> segments, such as lifestyle, behavior, or socioeconomic status.

Market segmentation assumes that different market segments require different marketing programs – that is, different offers, prices, promotions, distribution, or some combination of marketing variables. Market segmentation is not only designed to identify the most profitable segments but also to develop profiles of key segments to better understand their needs and purchase motivations. Insights from segmentation analysis are subsequently used to support marketing strategy development and planning. 
In practice, marketers implement market segmentation using the <a href="/facts/Segmentation%2c_targeting_and_positioning/9YXM86kz">S-T-P framework</a>, which stands for Segmentation → <a href="/facts/Targeting_(advertising)/SsSEgQlt">Targeting</a> → <a href="/facts/Positioning_(marketing)/ArJjlahP">Positioning</a>. That is, partitioning a market into one or more consumer categories, of which some are further selected for targeting, and products or services are positioned in a way that resonates with the selected target market or markets.

Market segmentation open-in-new

Market segmentation