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Market segmentation
is the process in marketing of dividing a market into distinct subsets (segments)
that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their
needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are
likely to have similar feelings and ideas about a marketing mix comprised of a given product or service,
sold at a given price, distributed in a certain way, and promoted in a certain way.
Broadly, markets can be divided according to a number of general criteria, such as by industry or public
versus private sector. Small segments are often termed niche markets or specialty markets. However, all
segments fall into either consumer or industrial markets. Although it has similar objectives and it
overlaps with consumer markets in many ways, the process of Industrial market segmentation is quite
The process of segmentation is distinct from targeting (choosing which segments to address) and
positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify
groups of similar customers and potential customers; to prioritise the groups to address; to understand
their behaviour; and to respond with appropriate marketing strategies that satisfy the different
preferences of each chosen segment.
Improved segmentation can lead to significantly improved marketing effectiveness. With the right
segmentation, the right lists can be purchased, advertising results can be improved and customer
satisfaction can be increased.

Basis for segmenting consumer markets:

nations, regions, states, counties, cities, neighborhoods, climate, population density etc.
age, gender, family size, family life cycle, income, occupation, education, religion, race,
nationality etc.


social class, lifestyle, personality etc.


purchase occasion, benefits sought, user status, user rate, loyalty status, readiness status, attitude
toward product etc.

Basis for segmenting business markets:

industry, company size, location

Operating variables

technology, user/non-user status, customer capability

Purchasing approaches

purchasing function organization
power structure
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nature of existing relationships
general purchase policies
purchasing criteria
Situational factors

urgency, specific application, size of order
Personal characteristics

buyer-seller similarity, attitudes towards risk, loyalty

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