What is Market Segmentation?

Market segmentation is grouping together consumers who have one or more similar traits and then creating a strategy targeting those groups.

In today's world, consumers had an infinite amount of choices so it is very important to target a certain segment.

A lot of the time, a good marketing strategy will entail reaching many different customer segments by advertising or reaching out to them in different situations or scenarios.

If a company is smart, they will do their homework and find a segment which has very unique needs and then creates products or services to fulfill those needs.

The way companies think of customers is by putting them into customer segments. They do this by looking at different characteristics of potential customers:

Age - Customers who are who are at different points in their life have very different needs. Some products don't work for older age groups and some don't work for younger age groups. If you were 18 years old, do you think that a retirement planning company would be using their precious marketing dollars targeting you?

Gender - At a very early age, customer segmenting occurs. Diapers, baby clothes, baby books are all products which are targeting certain customer segments. Colors, size of products, and packaging are all  ways companies target customers by gender.

Family Structure - Single? Married? Divorced? Your marital status and family structure plays a big part in how you and your family spend money. If you are young and single, you are more likely to spend money on clothes, going out to bars, entertainment, and things of that nature. If you are married with children, you are probably going to spend money on your home, education, and other family related products.

Social Class and Income - social class is a group of people who usually do the same things, mingle with the same people, spend the same amount on the same products. The higher the social class, the more of a target they become due to their buying power.

Race and Ethnicity - As America gets more and more culturally diverse, race and ethnicity becomes more important because it create opportunities for marketers to specialize and focus on certain groups.

Geography - the location of the demographic you are trying to target plays a big role in your product offering. For example, people in the north wear and use more snow gear while people who live in warmer climates wear and purchase more beach gear.

Lifestyles - Even if people share the same demographic characteristics like gender and age, that doesn't mean they share the same lifestyle. Lifestyles usually encompass what people do with their spare time, things they value and feelings about themselves.