What is market segmentation, and why is it important?

Updated: Feb 22

Market segmentation happens when your target market is segregated according to groups that represents market segments that have certain preferences.


They are usually segmented according to;

  1. Income

  2. Age

  3. Gender

  4. Lifestyle

  5. Location

  6. Socio-economic groups

Income


Customers in a certain income group may be able to afford and are willing to spend a certain amount to purchase certain products or services. As such, income segregation is very important to identify the price suitable to market the product, should the firm wants to target a certain target market. Should the firm decide to target a high net-worth market segment, they would be able to price the product at premium, but must ensure that the quality and service meets the expectation of the consumers.


Age


The age of the consumers influences the design of the product. Younger consumers are more capable of navigating gadgets and devices than older consumers, who may not be familiar with the current technological advances. Therefore, e-commerce is appealing to younger than older consumers. As such, there are higher chances of young consumers purchasing a product online from a social media promotion.


Gender


The difference of preference by gender is clear as opposite gen