Definition

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Market segmentation is a way of aggregating prospective buyers into groups or segments, based on demographics, geography, behavior, or psychographic factors, in order to better understand and market to them. [1]
Having segmented a market, the task is then to determine which market segments are profitable to serve. The business can adopt one of three market segmentation strategies: [1]
- undifferentiated marketing, in which the business attempts to go after the whole market with a product and marketing strategy intended to have mass appeal.
- differentiated marketing, in which the business operates in several segments of the market with offerings and market strategies tailored to each segment.
- concentrated marketing, in which the business focuses on only one or a few segments with the intention of capturing a large share of these segments.
Aggregation is a concept of market segmentation that assumes that most consumers are alike. Retailers adhering to the concept focus on common dimensions of the market rather than uniqueness, and the strategy is to focus on the broadest possible number of buyers by an appeal to universal product themes. Reliance is on mass distribution, mass advertising, and a universal theme of low price. [2]
Benefit segmentation is the process of consumers into market segments on the basis of the desirable consequences sought from the product. For example, the toothpaste market may include one segment seeking cosmetic benefits such as white teeth and another seeking health benefits such as decay prevention. [2]
Microsegmentation is an approach to market segmentation in which a business’ customers are grouped into segments based on their geography, demographics, lifestyle and behavior. This allows the marketer to target each group (or even individuals) based on their specific wants and needs. [2]
Macrosegmentation is an approach to market segmentation in which a business markets are divided according to broad criteria at the level of the the organization, such as SIC code and size of the buying firm. [2]
Market Segments
Dual (or Double) Income, No Kids (DINK) denotes a household consisting of two working adults with no children. This population market segment is often targeted by marketers due to its higher percentage of discretionary income.
Single Income, No Kids (SINK) refers to a household with one working adult with no children. [3]
References
- Investopedia, Market Segmentation, investopedia.com/terms/m/marketsegmentation.asp.
- American Marketing Association, AMA Dictionary.
- Common Language in Marketing Project, 2017.