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Market segmentation is a process used by marketers to group similar consumers together.  This helps them better target their marketing efforts by sending the right messages to the right consumers.

A market segment usually features three aspects: 

  • First is homogeneity – the consumers in the segment have common needs. 
  • Second, each segment is distinctive – this implies the consumers in the group are different, in some way, from consumers in other groups.
  • Third is reaction –  which implies that consumers in the segment will have similar responses to the marketing and advertising they see.

One way to use market segmentation is by demographic. This refers to dividing consumers by aspects including age, gender, income, needs or a combination thereof. 

Market segmentation can also be based on consumer behavior. This involves grouping consumers according to how they feel about a certain product or their knowledge of those products. Consumers who are very interested in gourmet cooking are likely grouped together for firms focused on the sale of exotic spices, rare wines, fine cookware and sophisticated appliances.

Consider a manufacturer of snow blowers. This company would use geography and homeownership as part of their approach to focus marketing and sales strategies. Their target consumers would be suburban and rural homeowners in countries like Canada, Sweden and the northern US, rather than tropical countries like Brazil or Colombia.



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