Business

Q&A - What is market segmentation?

Jim Riley

15th January 2010

Market segmentation is the technique used to enable a business to better target it products at the right customers.  It is about identifying the specific needs and wants of customer groups and then using those insights into providing products and services which meet customer needs.

Segments are usually measured in terms of sales value or volume. In the diagram below, segment B is twice the size of segment C:

 

Why do businesses need to segment their markets? Because customers differ in the…

  • Benefits they want
  • Amount they are able to or willing to pay
  • Media (e.g. television, newspapers, and magazines) they see
  • Quantities they buy
  • Time and place that they buy

There are various methods (or “bases”) a business can use to segment a market. Some of the most populare are summarised below:

 

Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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