The reasons why businesses segment the market
Businesses segment markets for a range of reasons. The main aim of businesses with segmentation is to divide mass markets. Businesses do this to target the right products at the right people, to satisfy customer needs, and to increase sales and profits.
Dividing mass markets means that businesses split customers into subcategories to provide them with a focus when developing products and undertaking marketing activities.
Targeting the right products at the right people
Targeting the right products at the right people is very important. Getting this right means that businesses are less likely to waste money on marketing and promotion.
| Type of segmentation | Example |
| Age |
|
| Gender |
|
| Income |
|
| Geography |
|
| Lifestyle |
|
| Type of segmentation | Age |
|---|---|
| Example |
|
| Type of segmentation | Gender |
|---|---|
| Example |
|
| Type of segmentation | Income |
|---|---|
| Example |
|
| Type of segmentation | Geography |
|---|---|
| Example |
|
| Type of segmentation | Lifestyle |
|---|---|
| Example |
|
Satisfy customer needs
Customers have different needs and requirements that must be satisfied by businesses. Customer needs change constantly so it is important that businesses are able to keep up with and match these needs consistently.
An example of a customer need might be a segment of the market requiring low-cost food and drink. A business may set up aiming to meet this need.
Increase sales and profits
By targeting specific customer groups, business can increase their sales and profits. Segmenting products means that businesses are likely to create products and services that have a higher chance of selling. For a small business, using segmentation to target a smaller group of customers could give them a higher chance of business survival.