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Market Segmentation


Understanding market segmentation is an important feature of knowing who your customers are. Within most industries there are different types of purchasers, with distinct needs and motivations for buying.

Market segmentation is concerned with becoming familiar with the varying groups of customers and targeting one or more of them in a manner which is likely to attract them.

The composite groups with a specific business area can be separated in a number of ways, some of which will be dependant on the particular industry in question.

Some common distinctions which might be drawn between customers in a specific business segment might include the attributes listed below.

Price as a Determinant

For many actual and potential customers the price of a product or service is a strong or perhaps sole determinant of whether they will make a purchase.

The levels of price sensitivity which exists in a particular market segment can help when starting a small business as a means to determine whether that chuck of the industry will be targeted because it present significant possibilities or ignored because it is judged as not worthwhile.

Within a given market there might be those customers who are willing to pay almost any amount for the product or service because it is new or has features which are better than anything before it.

At the other end of the scale there is the value seekers who because of lack of funds or personal decision will not pay more than £x for the same item.

Identifying and segmenting these two distinct groups of customers can result in a targeted and effective marketing campaign which produces favourable results in both sectors.

Segmenting a Market Based on Opinions towards Fashion

How people view fashion can be used as a method of segmenting a market. Again there are those for whom being seen with the latest gadgets, colours and styles is of paramount importance. Conversely, others see basic the basic functionality contained in lower versions as quite sufficient and image as an unnecessary luxury.

This can therefore produce a two or more tier purchasing cycle which could stretch over several weeks, months or even years as the different purchaser types step up to buy at different times.

Urgency of a means of Determining Market Segments

The levels of urgency to purchase which exists within an industry can be used to determine different market segments. Take the housing market for example, where the demand to be resident close to good schools will lead to stronger demand for houses in certain areas irrespective of what is happening with the market nationally.

Such demographical attributes which would affect couples in their thirties and forties with young children will be different to those which are applicable to groups in their fifties and sixties whose children have already grown up.


Understanding market segmentation and the differing motivations which apply to the distinct customer types within each slice can be used as a means to define the business, who it wishes to attract and how it applies its marketing budgets and approaches its whole campaign.

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