Market Segmentation: Slicing the Market

Posted in Marketing & Strategy Articles, Total Reads: 9725 , Published on 24 May 2011

Ever since ages, humans have kept in progressing in every field. The prime reason before every innovation created by man was fulfilling a need. For his own benefits, man has been creating innovative and breakthrough products which help him in having an easier life. But with the invent of more science and technology, manufacturing products was not a mechanical process anymore. With more and more companies in the scene, competition became very severe and companies had to focus on fulfilling specific human needs. Modern day marketing focuses on three basic concepts namely Segmentation, Targeting and Positioning (STP). And off these, to reach to a specific kind of target group, the first most important tool in the field of marketing management is Market Segmentation.




Market segmentation essentially means a subset of a market. Market segmentation refers to slicing the entire market of various parameters, which would help marketing and manufacturing companies in selecting a target group for a specific product. Market segmentation cuts the market on the basis of certain characteristics which are similar to the needs which the product aims to fulfill and helps in fulfilling the needs of a potential customer.

Apart from just the needs of a customer, there are other parameters which too are essential while segmenting the market. Some of the important points can be listed below:


• Identifiable: The parameters of the segment must be measurable and identifiable.

• Accessible: The segment should be accessible to communications and advertising done by the company.

• Substantial: The segment should be big enough to make sure the resources are optimally utilized and not wasted.

• Durable: The segmented market must be able to withstand market fluctuations and should be stable.

Thus, these are certain points which are essential which must be found, evaluated and analyzed before segmentation is performed.

There are primarily 2 kinds of segmentation which can be done, namely consumer segmentation (business to consumer) and industrial segmentation (business to business).

Consumer segmentation involves large number of people or potential customers and smaller investment per customer. Segmentation of the consumer markets can be done on the basis of the following customer characteristics:


• Geographic Segmentation: This can be done on the basis of region, population, urban/ rural market or climatic variations.

• Demographic Segmentation: This kind of segmentation analyses the market on the parameters like age, gender, occupation, income, education, ethnicity, religion etc.

• Psycho-graphic Segmentation: Personal human traits like activities, interests, values, attitudes etc of the potential customer group are studied for segmentation.

• Behavioral segmentation: Another set of parameters for segmentation are based on behavior patterns like brand loyalty, usage rate, occasions etc.


Industrial Segmentation differs from consumer, as industrial segmentation involves fewer potential industries but involves huge and precise investment. Characteristics of Industrial segmentation is discussed below:


• Location: Geographical locations like nearby ports, airports and accessibility is a factor for segmentation.

• Company Analysis: This segmentation takes into account company size, sector, purchase criteria, material requirements etc.

• Behavioral Segmentation: This analyses segments on the basis of buying pattern, seasonal variations etc.


Thus, industrial segmentation focuses on the needs of the entire industry.


Making quality products is one aspect of business. Advertising and communicating is another important aspect. But the one tool which helps channelize all the efforts and focus of a company towards filling the need gap of customers, is by slicing the market by segmentation.

This article is part of the MBA Concept Series



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