Marketing Minute 081: “What is Market Segmentation?” (Marketing Basics / Marketing Tactics)

Marketing Minute 081: “What is Market Segmentation?” (Marketing Basics / Marketing Tactics)

Marketers segment their customers, but how and why?

When marketers sell their products, they know that each customer values a product or service in a slightly different way. One person may care most about reliability; another prestige; another ease of use; and someone else, cost.

As marketers identify various groups, or segments, of people who care about particular aspects of the products being sold, marketers adjust their actions by changing marketing communications or distribution channels or even the products themselves.

To build an efficient segmentation strategy, first, marketers determine which individual characteristics differentiate the overall population into sensible segments, with a focus on attitudes, interests, and desires, rather than demographic factors.

Second, marketers assess the value of each segment by comparing the potential sales and profits they would receive from a segment with the costs of satisfying the people in that group.

Finally, marketers select which segments they’ll be able to satisfy over an extended period of time, with consideration of competition and the changing marketplace.

For marketers, segmentation is a necessity for long-term profitability. And for consumers, segmentation allows us to get what we want for a price we’re willing to pay.

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