Market segmenting is dividing the market into groups of individual
markets with similar wants or needs that a company divides into distinct
groups which have distinct needs, wants, behavior or which might want
different products & services. Broadly, markets can be divided
according to a number of general criteria, such as by industry or public
versus private. Although industrial market segmentation is quite
different from consumer market segmentation, both have similar
objectives. All of these methods of segmentation are merely proxies for
true segments, which don't always fit into convenient demographic
boundaries.
Consumer-based market segmentation can be performed on a product
specific basis, to provide a close match between specific products and
individuals. However, a number of generic market segment systems also
exist, e.g. the system provides a broad segmentation of the population
of the United States based on the statistical analysis of household and
geodemographic data.
The process of segmentation is distinct from positioning (designing an
appropriate marketing mix for each segment). The overall intent is to
identify groups of similar customers and potential customers; to
prioritize the groups to address; to understand their behavior; and to
respond with appropriate marketing strategies that satisfy the different
preferences of each chosen segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing
effectiveness. Distinct segments can have different industry structures
and thus have higher or lower attractiveness
