Market Segmentation Definition

by Devra Gartenstein ; Updated April 10, 2018
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Customers come with varying needs and tastes. Unless your products are very narrowly targeted for a specific audience, such as a medical device that treats a rare ailment, you’ll most likely need to segment your marketing and target your products and your advertising to a variety of submarkets.

Market Segmentation Definition

Market segmentation is the practice of identifying and marketing to categories of customers. Once you’ve defined what different groups of customers want and need, you’ll be well positioned to develop products that meet the specific needs of each group. For example, if you design and sell sporting gear, you will have a separate set of products for people who play basketball versus people who play baseball and golf. Once you’ve developed products for these discrete markets, you’ll be able to tailor your marketing messages to reach the right customers. As a sporting goods manufacturer, you might market basketball gear to people who like to play impromptu street games as well as people who join basketball leagues. As a manufacturer of golfing equipment, you may target retirees and business executives.

What are the Benefits of Market Segmentation?

Market segmentation benefits your business by helping you reach the right customers. The better you understand who your customers are and what they need, the better you’ll be able to tailor your products to their tastes and idiosyncrasies and earn their repeat business. Business travelers will need travel bags that carry laptops and business suits, while new mothers will need travel bags that are customized for bottles and diapers. If you develop a market segmentation strategy that starts with designing bags for each of these different uses, your marketing will follow naturally from your product development. You simply need to find your target markets and build awareness of the ways that your products can benefit them. Market segmentation decreases the size of your target market by narrowing down your products appeal, but it allows you to reach these customers more effectively because the traits you have identified make it easier to find them and focus your message.

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How to Use Market Segmentation in Business

It’s best to use market segmentation as a continuous strategy in your business. The process of identifying your different types of customers, and developing products targeted to their distinct needs leads naturally to segmented marketing strategies that reach these discrete groups. Identify media that are likely to attract these groups of customers, such as oncology journals for cancer treatment medications and maternity magazines for prenatal vitamins. Use your marketing copy to emphasize the features of your products that appeal to each group.

About the Author

Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.

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