Question

What is a market segment?

Answer 1

A market segment is a subgroup of consumers (or businesses) within a larger market who share similar characteristics, needs, or behaviors and therefore are likely to respond similarly to a particular marketing mix.

Key points
- Segments are formed using variables such as demographics (age, income), geography, psychographics (values, lifestyle), and behavior (usage, loyalty, purchase occasion).
- Good segments are: measurable, accessible, substantial (big enough), differentiable (distinct needs/response), and actionable (you can design marketing for them).
- Businesses use segments to target resources, tailor products/prices/promotion, and position offerings more effectively.

Quick examples
- Smartphones: budget buyers, mid-range value seekers, premium flagship buyers.
- Coffee: on-the-go commuters (convenience), specialty coffee fans (quality/flavor), home-brewers (bulk/price-conscious).

Why it matters
- Targeting specific segments improves marketing efficiency and increases the chances of meeting customer needs and achieving higher sales and loyalty.