Business Principles:  Market Segmentation

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Mr. B's Online JavaScript Quiz:  Market Segmentation

Video TranscriptMarket Segment -- breaking down the market

You’ve probably heard the saying, “different strokes for different folks” and its true, isn’t it – we do not all want the same things. When we go shopping, part of the fun is finding something different.

When we build bridges between buyers and sellers, when we market products and services, we need to think about different kinds of people. We need to think about different needs and wants. We need to communicate with each different group if we want to build a bridge between buyers and sellers. We have to remember, “different strokes for different folks”.

Now, in fact, many products and services are essentially alike – little or no difference at all. How do we make people want to buy OUR product? We choose groups of people and tell them how or product meets their wants and needs.

Breaking the population of people that might want or need our productd into smaller groups is called SEGMENTATION – its easy to remember – just think of all the segments of a slimy worm! YUK! Bet you remember that image though!!

But remember – we don’t market the same way to each segment the same way and we might not even market each segment the same product or service. The point of thinking of segments is to put people in groups. This makes it easier to build our marketing bridge connecting buyers and sellers.

To get started – we'll look at 3 ways to segment a market:

  1. Geographic refers to geography. It’s where people live and where they shop. In geography class, you learn about PLACES. You look at maps. Imagine a map that tells you where your customer. If we can put people into groups on a map, this is geographic segmentation.
  2. Demographics is a fancy work, but it is a simple idea. Things like AGE, INCOME, GENDER, OCCUPATION, SAVINGS and even the color of one’s hair can be DEMONSTRATED and verified as fact. If we use demonstrable facts to put people in groups, we are using demographic segmentation.
  3. Psychographics actually where marketing pros focus – just like psychology, psychographics are about how people thing – attitudes, values, and believes. We can identify different groups of people based on how they think – a powerful marketing too – this is psychographic segmentation.

There is a fourth way we can segment markets, based on how people act.  This is called Behavioral segmentation.  In this case, we only look at what we can see people do.  Usually, this means whether they buy our product or not. 

Because there are always factors that influence and reasons that people act as they do, behavioral segmentation overlaps the other three types of segmentation.  When we talk about behavioral segmentation, we are looking at what people actually do and do not ask ourselves "why".

There are a few other ways to identify groups of people that marketers use, but these are the most common types of groups.  Professional marketing people at McDonalds, Coke, Pepsi, Burger King, Subway, and other big companies know how to build bridges between buyers and sellers.

They know that it they can make us want their products, we continue to want their products. They know that this takes messaging – this takes advertising, promotion, and sometimes direct selling.

Student Activities

  1. Market Segmentation Guided Notes
    1. New Balance Shoes Targets its Market
    2. Athletic Footwear Industry (slideshow)
    3. Market Segmentation: Reebok Case Study (slideshow)
    4. Market Segmentation Writing Prompts (pdf form)
  2. Summative Assessment:  Segmentation Project
    1. Market Segmentation Study Guide (project resource)
    2. Project:  Market Segmentation (.pdf form)
    3. Market Segmentation Project Rubric (downloadable, printable .pdf)

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