Market Segmentation

Understanding Market Segmentation: A Business Overview

If you have just opened a new business, no matter what the industry, if you only market to the general population, you face little chance of success. Instead, you have to practice market segmentation, which divides your target market into smaller niches of customers who share common wants and needs. 

Once you have identified a group of niches, you utilize specific touch points to communicate the benefits of your organization to them. When you know the characteristics of these niches, it is easier to reach them more effectively.

Ways to Identify Your Niche

Several different methods work for marketers seeking to segment their target market. Geographic and behavioral differences are two of the primary discriminants for market segmentation. Consider the example of a new Italian restaurant. If you own this new bistro, the geographical location largely determines the price point of your fare. In an area with higher rents, you need a more upscale atmosphere, even if the majority of what you serve is casual thin-crust pizzas. In an older area, a “hole in the wall” restaurant often builds a loyal following because of the unique flavor of your food.

Links Between Segmentation and Advertising

If you own an automobile company, you market your minivans differently than you market your sports cars because the likely buyers come from two completely different segments. The minivan buyer wants plenty of storage, safe and comfort in seating, a video entertainment system to keep the kids occupied and even an onboard vacuum cleaner to keep things neat. The sports car buyer wants the finest leather interior, a powerful engine and the feeling of content isolation on the open road. When you watch ads for these two vehicles, you see these areas of emphasis.

Elements of a Market Segment

For a niche of your target market to form a segment, it must meet several criteria. It has to respond consistently to the same market stimulus, it must have internal homogeneity, it must have enough size to bring in profit, and it must have the stability to last for the long term. These factors give it usefulness in picking a marketing mix for your organization

Marketing Segmentation by Occasion

This method of segmentation uses the calendar or needs of specific groups to create a niche. If you sell costumes, the vast majority of your profit comes between the end of August and the end of October, when Halloween hits. If you sell Christmas ornaments, count on your biggest times to come from the end of September to the end of the year.


For your new business to succeed, you have to find a niche for your business to dominate. Using successful marketing segmentation techniques gives you an edge up on the competition.

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