Market Segment

A market segment is a group of people with the same marketing goals. Market segments unite people by one or more characteristics, forming a larger market. Developing a target market for products and services requires corporations and their marketing professionals to consider different criteria. Their methods depend on the type of segment, relying on the needs, lifestyles, demographics, and individual characteristics of the target consumer.

Understanding Market Segment

Market segment is a group of consumers with similar preferences and antipathies for goods and services in the market. Users of services and buyers of goods can be people, businesses, companies, or mixed types.

Market segments are influenced by marketing strategies, plans or promotions. They are quite predictable reactions, so marketers use segmentation to select a target market, that is, to divide the market into subgroups with similar characteristics of their participants.

A market segment has to meet the basic criteria, which are based on 3 main characteristics:

• The homogeneity of the common needs of the participants in the segment.
• Something should differentiate a group of people from others, something that unites them into a group.
• Similar or common reaction to marketing.

Gender, age, interests, lifestyle, etc. are part of common characteristics of a market segment. Geographic, demographic, psychographic and behavioral market segmentation are common examples.

Examples of Market Segments and Market Segmentation

The banking industry clearly demonstrates the marketing of companies to define the market. Commercial banks serve many people with similar life situations and financial goals. If a bank is targeting older people, it conducts research on financial needs, in which retirement planning is at the top of the list. In this case, tax-deferred accounts may be of interest to consumers.

If a bank wants to provide services to Millennials, the research will show that people of this generation plan to start a family. This market segment would be better served by college-friendly savings and investment accounts.

When a company does not have a target market, but has a ready-made product, it determines the target group itself and adapts the offer to it. For example, restaurants located near an educational institution may not focus on expensive business customers, but arrange a happy hour for students instead.