Market segmentation

Essay by Devi_kensCollege, Undergraduate May 2005

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BUS 400

Prepared for

Mr. Jimmy Kelana

Lecturer of Essentials of Marketing

Prepared by

Devi (B30611231)

5th April 2004

Kensington Institute Indonesia

Market Segmentation is the process of dividing a market into direct groups of buyers who might require separate products or marketing mixes. There are several major bases for segmenting the market; they are geographic, demographic, psychographic and behavioral variables.

Geographic segmentation

Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, countries, cities or neighborhoods. In this way of segmenting market, a company should produce and sell the right products in the right geographic areas at the right times.

Demographic segmentation

Demographic segmentation is the process of segmenting market based on variables such as gender, family size, family life cycle, income, occupation, education, religion, race and nationality. This is the most popular bases for segmenting customer groups because consumer needs, wants and usage rates often vary closely with demographic variables and easier to measure than most other types of variables.

• Age and life-cycle stage

Companies who use age and life-cycle segmentation offer different products or use different marketing approach for different age and life-cycle groups. However, marketers must be careful to guard against stereotypes when using this kind of segmentation. Although you might find some 70-year-olds in wheelchairs, you will find others on tennis courts. Thus age is a poor predictor of a person's life cycle, health, work or family status, needs and buying power. Age and life-cycle approach are often use by insurance companies.

• Gender

This kind of segmentation has long been used in clothing, cosmetics and magazines. The car industry uses gender segmentation extensively. Women have different frames, upper-body strength and greater safety concerns. To address these issues, car makers are designing cars with...