Market segmentation is the process of breaking down a larger target market into smaller segments with specific characteristics. It is important as it helps to customize a product/service and also evolve the advertising strategy to reach the target group. Another example of market segmentation is the athletic shoe industry.
The four basic factors of Market Segmentation are:
Geographic: Where are your potential customers? In rural or urban areas? If you are in retail stores business, then your locations within the cities matter. If you are selling a product that is climate sensitive like air conditioning or heating, then certain areas would be your priority areas and your market is not a uniform one..
Demographic: Customers are individuals and there are many factors that go into the making of an individual personality such as age, race, religion, gender, income level, family size, occupation, education level and marital status.
Psychographic: There are certain products that have different considerations to them than the feeling of necessity. The desire for a feeling of elevated status, enhanced appearance and feeling moneyed are some considerations that go into the purchase examples of.
Behaviouristic: Consumers' reasons for purchasing products and services can be varied and complex. It could be a fascination or identification with the brand or a loyalty with an existing one or it could be the cost or a belief induced by peer pressure.
