Segmentation and Targeting

Whilst you could argue that every customer is different, in fact you can usually put customers into groups which have something in common - for example age, social class, spending power, sex or buying attitudes. This is known as segmentation - splitting a market into sub groups of people or organisations with common needs or preferences who are likely to react or purchase in the same way.

It is very unusual to find a market where one product is equally acceptable to all these different types of customers. Even basic products like sugar and salt are used by different consumers for different purposes and are available in different forms. If you can identify market segments whose needs are not catered for by the standard form of product, and you can supply those needs profitably, then you have the basis of a good business.

Sometimes you will find that different segments present conflicting demands. By thinking through the needs of the different market segments and taking account of the company's strengths you can choose one or more segments on which to concentrate your efforts. Choosing a segment entails gathering information about that segment, its future potential, the strength of the competition and the company strength you will bring to bear. This is known as targeting.

Once you have a clear idea of:

You can then plan your The Marketing Mix.