Companies in the modern world rarely seek to satisfy the entire market with their solutions. Rather, they seek to identify and target key groups of consumers to market to, to create successful campaigns. This aspect of marketing is critical to any business to reduce wasted resources and identify key areas that hold the most potential profit both short, and long term (Iannuzzi, 2014).
Market segmentation involves breaking the whole, undifferentiated market down into differentiated pieces or segments to better target each individual segment. Some example ways to segment a market might be by income, demographic, geography, purchase behavior, similar needs, mutual interests, or shared lifestyles.
Market segmentation is not an exact science, so here is a list of ideal conditions for which you can structure your market segmentation research (in no particular order):
- Data you have on each segment is the latest, most relevant
- All segments are clearly and precisely defined, meaning the market is easy to segment
- These segments do not change quickly or often (if they do, can you stay on top of them?)
- Customers within each segment are easily within reach by the campaign
- Segments chosen for campaign have few competitors
- The segments have significant and measurable research to identify them
- The segments are large enough to be worth identifying/targeting
- Segment populations should be internally homogeneous (similar) and externally heterogeneous (different)
If you’re new to marketing like I am, or thinking of starting a business, consider researching market segmentation and practice segmenting prospective markets to determine viability.
Sources for further study:
Iannuzzi, A., (2014). Market Segmentation Criteria – Five Essential Criteria. Retrieved on April 20, 2017. Retrieved from https://www.linkedin.com/pulse/20140730082827-41390803-market-segmentation-criteria-five-essential-criteria
Tutor2u. (2016). Marketing: Segmentation – Targeting – Positioning. [Video file]. Retrieved from https://youtu.be/0srjdRDh99Y (9:12)