Market segmentation

I attended my first class tonight, Analyse Consumer Behaviour. We spent time going over the basics of marketing: what marketing is, the marketing process, and spent some time on market segmentation.

But what is a market? Put simply, a market is all of your product’s current consumers and potential consumers. Depending on where you’re offering your product or service, that could be anywhere from a small group of people right up to several hundred million, if not a couple billion people. It’s unrealistic to think that your product is going to do the same thing for everyone, so you need a way to break that large group of people down into smaller groups who have similar things in common.

This is where market segmentation can come in. Market segmentation can be thought of as a tool to help a marketer decide where best to use their resources, and to make their workload easier because you’re not trying to market to everyone.

For marketing to consumers, you can segment your market using:

  • Demographics
  • Geographics (location)
  • Behavioural (how often and when something is used)
  • Benefits or needs
  • Psychographics (lifestyle)

Segmentation methods are slightly different for marketing to businesses, but that’s getting covered in the next class.

Here’s an interesting fact: Newcastle is a common test market for products in Australia as Newcastle’s demographics tend to mirror the average Australian population as a whole.