(a) Explain the meaning of market segmentation (b) List and explain four factors to be considered in segmenting a market

Answer Details

(a) Meaning of market segmentation

Market segmentation is the process of dividing a large, heterogeneous market into smaller, distinct groups of buyers (segments) who share similar needs, characteristics or buying behaviour, so that the seller can design products and marketing programmes to suit each group. Each segment is made up of customers who are likely to respond in the same way to a given marketing effort, which allows resources to be used more effectively.

(b) Four factors considered in segmenting a market

1. Geographical factors: The market is divided according to location such as region, country, urban or rural areas and climate. Consumer needs differ from one area to another, for example demand for raincoats is higher in wet areas.
2. Demographic factors: Buyers are grouped by measurable population characteristics such as age, sex, family size, occupation and education. For example, products may be designed separately for children, adults, men or women.
3. Income (economic) factors: The market is divided according to the income or purchasing power of consumers into high, middle and low income groups, since ability to pay determines the goods and brands they can buy.
4. Psychographic and behavioural factors: Buyers are grouped by lifestyle, social class, taste, religion, attitudes and buying habits such as brand loyalty and rate of usage, because these influence the choice and quantity of goods bought.