Definition & Types of Market Segmentation

Fri, 03/14/2014 - 00:40 -- Gulzar Ahmed

Market segmentation refers to sub dividing a market keeping in view some commonality, similarity, or kinship. Market Segmentation is considered one of the most important pillars of marketing strategy.

Definition of Market Segmentation

We can simply define market segmentation as “dividing the whole market into different smaller groups of customers with their distinct needs, characteristics, or behavior that might require different products, services and marketing strategies”. For example different cellular companies now a day design different cell phones for boys and girls, different classes of airline services like economic class and business class.  The purpose of segmentation is the concentration of a company on the subdivision or market segment to gain a competitive edge within the segment.  Concentration of a company on particular segment is actually essence of all marketing strategy. Market segmentation is the conceptual tool to help in achievement of organizational goals and objectives.

Types of Market Segmentation

Let’s discuss different types of market segmentation by having special focus on consumer markets rather than business markets.

definition and types of market segmentation

Distribution Segmentation

As name indicate that distribution segmentation done on the basis of company’s marketing distributions channels. Company can make available their products in different markets through different channels of distribution. Distributional segmentation is common, especially among those companies which grant each channel a unique brand. Examples of distributional segmentation is a hair shampoo sold only through upscale beauty salons or an upscale line of clothing sold only in expensive department stores.

Geographic Segmentation

This is the common type of market segmentation in which companies segment the market by targeting a restricted geographic area. For example a company may choose to market their particular brands in certain countries, but not in others. Many restaurants focus on a limited geographic area to provide their service and generate more profits. Geographical differences in customer preferences provide a basis for geographic segmentation.  A leather jacket company might only market its products in areas cold climatic conditions. Some common examples of geographical segmentation include warm areas or cold, urban or rural, high-humidity areas or dry areas, and so on.

Media Segmentation

Media Segmentation is a new kind of segmentation which many companies are adapting now a day. Companies do this segmentation due to the face that different media tend to reach different audiences. If a company pours its entire budget into one media, the might loss many customers who not use that media and instead use other. For example some people used to watch TV and other listen radio while some other prefer reading and they read newspaper and magazines, so companies should try to target different media for the publicity of their brand.  Media segmentation is also practiced by those companies who have some control over the media and they can somehow discourage competitors from using that media.

Price Segmentation

Price segmentation is common among different companies and widely practiced. The variation in household incomes provides an opportunity for segmenting markets on price basis. If per capita income of a country ranging from low to high, then a company should offer some cheap products, some medium as well as some expensive products in the market. The best example of price segmentation is the range of automotive brands marketed by General Motors historically. Pontiac, Chevrolet, Buick, Oldsmobile, and Cadillac varied in price as well as in status along a clearly defined spectrum which appeal to successively higher income groups.

market segmentation definition and types

Demographic Segmentation

Demographic segmentation is the subdivision of market on the base of age, gender, income, housing type, and education etc. Some brands are targeted only to women, while others only to men. Hearing aids are targeted to the elder people while music downloads tend to be targeted to the young. Education levels market segments includes private elementary schools might define their target market as highly educated households containing women of childbearing age. Demographic segmentation always plays a vital role in whole segmentation strategy.

Psychographic Segmentation

Psychographic or lifestyle segmentation is based upon consumer attitudes, values, emotions, behaviors, beliefs, perceptions, and interests. Psychographic segmentation is a lawful way to segment a consumer market.  We can simply say that psychographic segmentation is the division of market on the base of social or cultural class, life style or personality characteristics of different customers.