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Market segmentation is an integral part of a company's marketing strategy. It is the process of breaking down a larger target market into smaller, more homogeneous groups of customers that you can more efficiently market to. Both consumer-oriented and business-oriented companies should segment customers using one of several common approaches.
Demographics: market segmentation planning is one of the most common approaches to segmenting markets. With this strategy, a company simply divides the larger market into groups based on several defined traits. Geographic segmentation is used by companies that sell products or service specific to a certain community, state, region, country or group of countries. Local businesses usually get no benefit in paying for national or international advertising.Psychographics: segmentation has become increasingly common as companies look to identify consumers based on interests and activities in lieu of demographics.
Behavioral: segmentation is based on user behaviors, including patterns of use, price sensitivity, brand loyalty and benefits sought. A company may have customers with a similar demographic makeup but distinct behavioral tendencies.
Segmenting: for business customers often has overlap but commonly includes geographic, customer type and behavior-based strategies. Geographic business segmentation is similar to that with consumer segmenting.
