Question

What are some real-life examples of market segmentation?

Answer 1

Market segmentation or customer segmentation is the process of dividing the target market which is different from one another. There are four types of market segmentation. They are:-

• Geographic segmentation means dividing the market based on the climatic conditions, density, market size.
• Demographic segmentation means dividing the marked based on age, sex, ethnic background, income etc.
• Psychographics segmentation is dividing the market based on lifestyle, perception, desire etc.
• Behavioral segmentation is dividing the market based on the knowledge, attitude, uses of products, etc.

The five requirements for effective market segmentation are: -

• Measurable - It is important that the needs, size, income and characteristics of the target customer is measurable.
• Differentiable - It is important to differentiate customers into groups so that their response to different marketing mixes should be different.
• Reachable - The target customer segment should be accessible to distribution channel, advertising media and sales representatives.
• Sustainable - The target segment should be large enough so that business can make profit.
• Actionable - It is important that the market segment should be actionable so that organization can use marketing mix to fulfill the needs of the customers.

Examples of market segmentation.

• Age - Coca cola targets people between 15 to 25 years of age.
• Income - Rolls-Royce cars target the upper income market segments.
• Geographic segmentation - Coca cola sells different product around the world.