Market Segmentation

When the term “market segmentation” is used,most of us immediately think of psychographics,
lifestyles, values, behaviors, and multivariate cluster analysis routines. Market segmentation
is a much broader concept, however, and pervades the practice of business throughout the world.
What is market segmentation? At its most basic level, the term “market segmentation” refers to
subdividing a market along some commonality, similarity, or kinship. That is, the members of a
market segment share something in common. The purpose of segmentation is the concentration of
marketing energy and force on the subdivision (or the market segment) to gain a competitive
advantage within the segment. It’s analogous to the military principle of “concentration of force” to
overwhelm an enemy. Concentration of marketing energy (or force) is the essence of all marketing
strategy, and market segmentation is the conceptual tool to help achieve this focus. Before discussing
psychographic or lifestyle segmentation (which is what most of us mean when using the term
“segmentation”), let’s review other types of market segmentation. Our focus is on consumer markets
rather than business markets.