🎯 What is market segmentation?
Big Idea: Market segmentation means dividing a market into groups of customers who share similar characteristics. Instead of treating everyone the same, you target specific groups with tailored products and marketing! 🧩
What is a market segment?
A market segment is a group of customers within a larger market who share similar needs, wants or characteristics.
If asked to 'define market segment', say: a group of consumers within a market who share one or more common characteristics that influence their purchasing behaviour.
📊 Ways to segment a market
Businesses can divide customers into segments using different criteria.
- Demographic — age, gender, family size, income level, education
- Geographic — country, region, urban vs rural, climate
- Psychographic — lifestyle, values, personality, interests
- Behavioural — buying habits, brand loyalty, usage rate, occasion
Example: A sportswear company might segment by age (teens vs adults), income (budget vs premium), and activity (running vs yoga).
Remember the 4 segmentation bases: 'Did George Play Basketball?' — Demographic, Geographic, Psychographic, Behavioural! 🏀
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✅❌ Benefits and limitations
- ✅ Products better match what customers actually want
- ✅ Marketing is more targeted and cost-effective
- ✅ Can charge different prices for different segments
- ✅ Identifies gaps in the market for new products
- ✅ Builds stronger customer relationships and loyalty
- ❌ Expensive to research and target multiple segments
- ❌ Risk of making segments too small (not profitable)
- ❌ Customer preferences change over time
- ❌ May miss customers who don't fit neatly into a segment