Market Segmentation is where the market is split up into groups based on Demographic, Geographic, behavioural and psychographic activities.
The market is segmented into group with similar needs and wants. The reason they do this is:
Better matching of customer needs
Customer needs differ, Creating separate offers for each segment makes sense and provides customers with a better solution.
Enhanced profits for business
Customers have different disposable income. They are, therefore, different in how they react to a price. By segmenting markets, businesses can raise average prices and subsequently enhance profits because their product meets the market’s needs.
Basic questions a business needs to know the answers to:
Who Are My Customers?
What Are They Like?
What Do They Want?
Where Can I Find Them?
How Can I Reach Them?
What Should I Say To Them?