Explain the term Market Segmentation - Leaving Cert Business - Question C - 2005

Market segmentation refers to the process of categorizing a market into distinct groups of consumers who share similar characteristics. This allows businesses to tailor their offerings and marketing efforts.

Segmentation can be based on various factors such as:

1. Socio-economic Status: Classifying consumers into different socio-economic classes helps in understanding their disposable income and consumption patterns.
2. Age: Different age groups have different interests and needs. For example, teenagers are typically interested in fashion, while older generations may prioritize comfort and practicality.
3. Geographic Location: Consumers living in urban areas may have differing preferences compared to those in rural areas, influenced by local culture and lifestyle.
4. Income Levels: The income level of a household can determine the type of products a consumer is likely to purchase. Wealthier consumers may look for luxury goods, while those with lower income might opt for budget-friendly alternatives.
5. Lifestyle: Personal interests, hobbies, and lifestyle choices can impact consumer preferences, making lifestyle segmentation a critical factor in targeting.
6. Disposable Income: Understanding the disposable income allows businesses to predict purchasing behavior and set appropriate pricing strategies.

In summary, market segmentation is a strategic approach that enables businesses to effectively reach and serve specific customer segments.