Market Segmentation

This section explains market segmentation covering: identifying market segments and market mapping.

What is Market Segmentation?

Market segmentation involves dividing a market into smaller groups (segments) of consumers with similar characteristics or needs.

This allows businesses to:

• Target specific customer groups effectively.
• Tailor products, services, and marketing strategies to meet the needs of each segment.

Identifying Market Segments

Market segments can be identified based on several factors:

Location (Geographic Segmentation)

Dividing the market based on where customers live or work.

Examples:

• Urban vs rural customers.
• Regional preferences (e.g., different tastes in food across countries).
• Useful for businesses offering location-specific services (e.g., local shops, delivery services).

Demographics

Segmenting based on measurable personal characteristics.

Includes:

Age: Products for children, teenagers, adults, or older customers.

Gender: Products aimed at men, women, or non-gendered audiences.

Education level: Differentiated offerings for students, graduates, or professionals.

Behaviour

Focusing on how customers act or interact with products.

Includes:

• Purchasing habits (e.g., regular vs occasional buyers).
• Brand loyalty (e.g., loyal customers vs those open to trying new brands).
• Usage rate (e.g., light, medium, or heavy users of a product).

Lifestyle

Based on customers' interests, values, and activities.

Examples:

• Health-conscious consumers (e.g., fitness products, organic food).
• Adventure-seekers (e.g., outdoor equipment, travel experiences).
• Eco-conscious consumers (e.g., sustainable products).

Income

Segmenting customers based on their financial situation.

Examples:

• High-income customers: Luxury products and services.
• Low-income customers: Budget-friendly products or essential services.

Market Mapping

Market mapping is a visual tool used to identify gaps and opportunities within a market.

It compares businesses, products, or customer segments based on two key variables (e.g., price and quality).

Steps to Create a Market Map:

• Identify the factors to compare (e.g., affordability and product range).
• Plot competitors or products on the map based on these factors.

Analyse the map to identify:

• Areas with heavy competition.
• Gaps in the market that could represent opportunities.

Benefits of Market Mapping:

• Highlights market trends and customer preferences.
• Helps businesses differentiate themselves from competitors.
• Identifies potential target segments for new products or services.

Conclusion

Market segmentation and market mapping are essential tools for businesses to understand their target audience and identify opportunities. By segmenting the market based on location, demographics, behaviour, lifestyle, and income, businesses can tailor their offerings to specific customer needs. Market mapping further helps identify gaps and strategically position products within the market.