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MGT301 - Principles of Marketing

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What is market segmentation? Explain the four major segmenting variables for consumer markets?

Market segmentation:

“Dividing a market into smaller groups of buyers with distinct needs, characteristics or behaviors who require separate products or marketing mixes. The company identifies different ways to segment the market and develop profiles of the resulting market segment”.

Four major segmentation bases for consumer markets will be:

  1. Geographic segmentation
  2. Demographic segmentation
  3. Psychographic segmentation
  4. Behavioral segmentation

Geographic segmentation:

Subdividing markets into segments based on location, the regions, countries, cities and towns where people live and work is geographic segmentation. The reason for this is simply that consumer wants and product usage often are related to one or more of these subcategories. Geographic characteristics are also measurable and accessible.

Demographic segmentation:

Demographics are the most common basis for segmenting consumer markets. They are frequently used because they are often strongly related to demand and relatively easy to measure. The most popular characteristics for demographic segmentation are age, gender, family, life-cycle, income and education.

Psychographic segmentation:

Psychographic segmentation divides buyers into different groups based on social class, lifestyle or personality characteristics. People in the same demographic Group can have different psychographic makeup. So psychographic segmentation helps the marketer in examining attributes related to how a person thinks, feels, and behaves.

Behavioral segmentation:

Some marketers regularly attempt to segment their markets on the basis of product-related behavior, they utilize behavioral segmentation. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. Many marketers believe that behavior variables are the best starting point for building market segments.