ZIMSEC O Level Business Studies Notes: Marketing: Market segmentation

  • this is the process of dividing/dis-aggregating the market into discrete/distinct groups(segments) of customers based on a variety of criteria
  • Here the word market refers to the total sum of all of a firm’s customers/consumers
  • The words customer and consumer after often used interchangeably in business
  • Consumer- is the end user of the product
  • Customer-purchase the product from the business either for their own use or on behalf of others
  • Customers are often, but not always consumers
  • Segmentation can be carried out on either consumers or customers but it is usually carried out on customers
  • Several criteria can be used to segment the market:
  • Economic Factors:
    1. Income
    2. Employment status
    3. Net worth
    4. Occupation
    5. Credit rating
  • Demographic Factors:
    1. Gender
    2. Marital status
    3. Language
    4. Age
    5. Geography
    6. Education
  • Psychological Factors:
    1. Loyalty
    2. Lifestyle
    3. Expectations and needs
  • Mass marketing is the opposite of market segmentation
  • mass marketing- is an attempt to appeal to an entire market with one basic marketing strategy utilizing mass distribution and mass media.
  • It is also known as undifferentiated marketing.

Purpose and benefits of market segmentation

  • Market segmentation allows the business to tailor its marketing mix strategy for each particular segment
  • Allows the business to focus and allocate its resources on the most profitable segments
  • Allows the business to grow and extend its market share by focusing on neglected segments
  • Reduces the business’s promotional cost by devising and focusing on what is effective instead of mass marketing
  • Helps the business to develop products that more perfectly suit the needs of each segment
  • Allows the business to develop new markets more efficiently and effectively
  • Enhances the business’s image
  • Can increase sales
  • Helps the business to retain customers and market share
  • Increases competitiveness
  • Allows the business to set the best prices for each segment
  • Aids the business’s communication with customers for example by advertising in the segment’s favorite platform
  • Ultimately all this results in improved profitability

To access more topics go to the O Level Business Notes

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