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Main Dictionary M

Market Segmentation

Market segmentation is the process of dividing potential customers into groups based on similar characteristics such as age, gender, place of residence, occupation, and much more. Market segmentation is an important term as it helps to create personalized offers for goods and services for each group and reach the target audience by setting up different advertising campaigns. 

Market Segmentation explained

There is the large number of characteristics by which the audience is put into groups.

However, they all come down to three main criteria:

  • Similar needs;
  • Being remarkable, special and different from other people;
  • Same reaction to the market.

For instance, a company that produces sporting equipment can have different segments for football players, figure skaters, hockey players, etc. They can react to different advertising campaigns. Taking into consideration groups of people with common characteristics allows the sporting goods company to promote products effectively.

The main goal of market segmentation is to increase sales and profits in different initial business conditions, reduce risk of losses, and find the best marketing strategy. Being aware of the customers’ needs and focusing on market segmentation enables companies to increase competitiveness and business efficiency when experiencing shortage of resources. 

Organizations can divide markets into groups according in many ways:

  • Geographically. The market is divided into regions, cities, countries, etc. The population, climate conditions, administrative divisions, and remoteness from the manufacturing enterprise are important.
  • Demographically. Genders, age,marital status of the client, the profit he or she receives are taken into consideration. 
  • Psychographically. Consumer’s way of living and belonging to a certain social class influence market segmentation. 
  • Behaviorally. The criteria are the readiness of customers for purchase, product usage, level of customer loyalty. 

It is better to use several criteria of market segmentation in order to accurately identify the target audience and make a portrait of it. 


Market segmentation can be seen in a company's goods and services and promotion activities. For example, breakfast cereal manufacturers offer their products to several segments such as senior consumers, people who lead a “wellness-oriented” lifestyle, children through different advertisements. They can create a positive brand image and brand loyalty by launching campaigns based on popular children’s cartoons. 

Market segmentation can also help a protein bars manufacturer conduct business. The main consumers are people who are on a diet, who want to build muscle mass, who need a quick snack, and professional athletes. This information based on market segmentation allows the brand to promote goods with a high appeal. 

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