Market Segments and Target Markets

Customers can be divided into groups who have similar characteristics – a ‘market segment’.  Ways of segmenting a market include by:

• Age eg child, teenager, adult
• Gender eg male, female
• Income eg low, middle, high
• Life style and interests – eg health conscious
• Geographical location eg urban, rural
• Socio-economic class eg upper, middle, working class.

Because customers in a particular market segment may have similar requirements, organisations can target markets by offering different product versions, different prices, sold in different places, using different promotion methods.

Benefits of Target Marketing:

• Products will be more appealing to those in each individual target market, thus number of sales overall across all market segments.
• Having a range of products spreads risks as the business is not reliant on demand for a single product and/or from a single target market.
• Products can be priced to meet the needs of the target market, and ‘placed’ (distributed) in a way that is convenient to the target market.
• Promotional activities may be more cost effective as spending is not wasted on activity that is not appropriate to certain market segments.