Identifying market segments
Market segmentation is the process of splitting a business’ target market into different groups. Businesses use these groups to make it easier for them to develop products aimed at certain people and to help them target their marketing. Small businesses generally split up their target market based on location, demographics, behaviour, lifestyle, income and age.
Location
Splitting up a market by location is also known as geographical segmentation. This is used to split up a target market based on where people live. A business may choose to target customers in its local area, or it may consider what types of products would sell in specific locations. For example, walkers in the Lake District may be more interested in buying hiking boots than people living in Manchester.
Demographics
Demographic segmentation considers the characteristics of people. These characteristics may include age, gender, race, religion, nationality, disability, ethnicity, sexual orientation and occupation. Businesses consider the demographics of the people to whom they want to aim their products. For example, a make-up business might target females aged 19–35 in the UK for a certain type and style of make-up. Some businesses target products at people of certain ages. Examples of such products include toys for children, pension plans for people aged over 60 and cars for people aged 17 or above.
Behaviour
Behavioural segmentation considers how people behave in relation to purchases at different times of the year and in different situations. For example, at birthdays, holidays and celebrations, people make purchases in addition to what they would normally buy. Card and gift businesses thrive on these events year-round, while other businesses provide specific products only at a certain time of year, such as special candles during Hanukkah or chocolate eggs during Easter.
Lifestyle
Lifestyle segmentation considers what sorts of lives the people in a business’ target market lead. This may take into account hobbies, sporting interests and other things customers do in their spare time. For example, a camera equipment retailer may want to target customers who are interested in photography, or a cricket bat manufacturer may want to target people with an interest in cricket.
Income
Income segmentation considers how much people earn and how much Money available for spending and saving once taxes have been deducted. they have. This is extremely important for certain products. For example, a business selling high-end luxury cars or expensive jewellery would need to target people with a high level of income. However, a budget brand of baked beans may target customers with a low level of income.
