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Market Segmentation

Dividing a market into distinct groups with distinct needs, wants characteristics,  or behavior who might require separate products or marketing mixes. A market segment is a subset that fits with other subsets to constitute a whole market. A market is composed of people, consumers, institutions, firms with needs & wants backed by sufficient purchasing power and willingness to buy. Markets are heterogeneous and consist of elements that are not of the same kind or nature. However, the heterogeneous market can be divided into many homogenous customer segments using several variables. This division of the whole market into relatively homogenous groups is called market segmentation.


True market segment is distinct from other segments as different segments have different needs. A market segment is homogeneous within the segment and exhibits common need, wants and demands. A true market segment responds similarly to a marketing stimulus.


Market segmentation is based upon the assumption that markets of all commodities are heterogeneous. Two groups of people are never common in all characteristics and all products seldom succeed by appealing to everybody. The marketers with clear marketing communications target the identified homogenous segments.

“Marketing Guru Philip Kotler defines market segmentation as the subdivision of a market into homogenous subsets of customers where any subject may conceivably be selected on a market target to be reached with a distinct marketing mix.”


Market segmentation helps the marketing decision in following ways:

  1. By helping the marketer to identify the groups of customers to whom he can more effectively target marketing efforts.
  2. By helping the marketer to avoid trial and error methods of strategy formulation.
  3. By helping the marketer in addressing the customer needs and satisfying them.
  4. By providing important data to the marketer on which long term plans can be formulated.
  5. By helping, the marketers to stay focused rather than scattering their marketing resources.

Features of a Market Segment

  • The market segment must be internally homogenous because consumers within the segment would be more similar to each other in characteristics.
  • The market segment must be identifiable so that the individuals can be placed within or outside the segment.
  • The market segment must be accessible to that it can be reached by an advertising media and distribution channels
  • The market segment must represent an effective demand.


Market Segments and Niches

Market Segments are large identifiable groups within a market,  within the car market buyers seeking basic transportation, high performance


A niche: is a more narrowly defined group which seeks a special combination of benefits.


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