What is Market segmentation and targeting?

Market segmentation refers to the demographics of your customers/audience. It's basically the grouping of people that have common traits. Anything that can define a person can be a segment. (ie. location, income, race, religion, sex, occupation, interests, age, etc...)

Targeting is the act of formatting your ad / message specifically for one of those segments, or placing it at a location where that segment gathers.

- Jason Green
BusinessHut.net

Example would be finding demand from people with children for MPV's so targetting your marketing to attract/retain/promote your product to that market, such as advertising outside schools etc.

Airile industry has "frequent flyers" programme on exactly that principle. Any defined group that it is profitable to target!

Segmentation refers to "splitting up potential buyers into different groups".

The market for wine, for example, might be segmented into groups like:

- students
- doctors
- lawyers
- parents of small children

... and so on. Each of these "segments" has different characteristics - what a student looks for in a bottle of wine (low price?) might be different to what a lawyer looks for (expensive looking label to impress client over lunch.)

You might then break this down into:

- students living in college
- students living in rented houses
- students living with their parents

Again, these might have different requirements. The students living in rented houses might be more interested in large crates of wine for parties, but the students living in college might only be interested in what the student union bar would get for them.


Targetting refers to working out how to market to each of these segments. You might get at the students living in college by writing to the student unions, and running a special promotion for cheap wines... or you might hit up the lawyers by offering a 20-minute courier-delivery service of champagne to their offices any time of the day or night... and sending out professional brochures to their office managers, together with details of the bonuses that the office managers get personally if their lawyers use this service.