Market Segmentation. Define Target Market. Include Demographic Segmentation

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What is Market Segmentation? Why do You Need to Segment Your Market?

Define Target Market

What is market segmentation? Define target market for your marketing strategy and plan; include psychographic segmentation, demographic segmentation, geographic and price segmentation, and more.

Market segmentation is the act of segmenting or dividing your marketplace into narrower, targeted buyers or groups of buyers. Understand how to define target markets and to focus your marketing strategies directly on your customers' needs.

Your goal in market segmentation is to target the 'best' prospective customers and, therefore, those most likely to buy specific products or services.

Define Target Market:

Target marketing: you can break that segmentation into more than one. Often marketers define the primary target market, the secondary target market and the tertiary target market.

Segmenting is typically used when creating a marketing plan and often must be considered hand in hand with marketing mix ( product, price, promotion, and place. ).

Which comes first, marketing mix or market segmentation?

Well, most often segmenting is completed first and then the target markets are considered in marketing mix.

You must be prepared to do some research to segment your market. This research can be primary or secondary (primary is research you conduct yourself such as interviewing potential customer or gathering information from industry suppliers; secondary is data you gather from research resources such as government statistics websites, industry associations, competitors’ websites, customers’ website, trade magazines, etc.).

Your prospective customers have a wide range of needs, wants and problems. After you have segmented your market, you will have a better understanding of how your business can focus on its niche. This focus will support your small business growth plans.

Market Segmentation

Your segmentation effort must be focused on clearly identifying those issues using a variety of factors:

For Business to Business Selling/ Markets:

Demographic segmentation: such as age (affects experience and maturity in decision making), gender (women and men make decisions differently, occupation (e.g. owner or employee) and other factors
Geographic segmentation: such as rural or urban, west coast, central or east coast
Behavioral segmentation: such as attitudes
Psychographic segmentation: this is often more closely associated with consumer markets but social, cultural, values and personality play a larger role in the business markets today
Price segmentation: price points - luxury, economy, value price segments

For Business to Consumer Selling/ Markets:

Demographic segmentation: such as age, gender, marital status, family size, life cycle
Geographic segmentation: rural or urban, city, state or province or region or country
Behavioral segmentation: attitudes and culture of the geography
Psychographic segmentation: lifestyle, values, personality, social
Price segmentation: in addition to luxury, economy, value, it could include bundle pricing, product line pricing, online pricing, loss leader pricing segments.

Ensure that your market segments or targets are accessible to your business and that they are large enough for your business.

For example: accessibility - if you manufacture an-expensive-to-transport product in Alaska and your target market is East Coast USA - the accessibility is poor and both time-to-market and delivery costs are high.

Another example: size of market - if you have a very specialized niche product that could only be used by 300 businesses in Western United States, you have to broaden your target market.

Never assume that you will gain 100% market share – even with a new product - because while your product may be new, other products might be serving the same market.

Target marketing is focusing your marketing plans on specific segmented markets. Pay attention to those markets when you develop your marketing mix.

Each of your targeted markets – primary, secondary and tertiary – will require its own marketing plan. Market segmentation allows you to focus marketing and business successfully on specific, narrow targeted markets.