Segmenting and Targeting Markets

Through out the semester we have studied many different aspects of marketing and analyzed different markets, but sometimes we view groups too broadly, and must use market segmentation to create smaller more defined groups to market to. Market segmentations helps large companies create products to satisfy specific groups' needs. All segments must meet four criteria to be successful:
Substantiality is very important in defining a market segment. The segment must have enough members & power to support the products created for it. Identifiability and measurability is important to decide whether there are even enough people to establish a segment. If the group cannot be readily identified and counted then it cannot be accurately established. Accessibility is often difficult in particular segments but a means must be figured out in order to reach its target group. This is one area where Apple is limited because all of its products require the use of the internet, while it is becoming very common in house holds, it still does not accommodate particular markets such as those in rural areas where internet is slow or hard to establish, or the elderly who have difficulties understanding how to use the internet, even if they know how to use the product. Responsiveness is the last criteria for successful segmentation, and it is used to determine whether a segment is truly acting differently than another based on its reactions. Although segments are different for various reasons, they may be treated the same if they act the same.

Markets are segmented based on many different variables and characteristics. Some of the most common types are as follows:
Geographic segmentation which can be based on location, market density, or climate. Demographic segmentation contains many subcategories such as age, race, gender, sexual orientation, or income. Although very broad, it can be very useful and accurate at predicting consumers behavior. There is also Psychographic segmentation which adds to the demographic information. It reflects more on the consumers personality, motives, lifestyles, and geodemographics.
Benefit segmentation is different however, because it groups consumers based on what they desire out of the product, not demographic information. Usage-Rate segmentation is also different in that it divides the market by how much is consumed. This creates segments like "potential users" "light users" "heavy users". It also utilizes the 80/20 principle which states that 20 percent of users create 80 percent of all demand. This is because generally "heavy users", although few in numbers, use exponentially more than other users.