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

Market Segmentation refers to the process of dividing a broad consumer or business market into smaller sub-groups of consumers based on shared characteristics. This segmentation allows businesses to tailor their marketing strategies and product offerings to meet the specific needs and preferences of these distinct groups.

Importance of Market Segmentation

1. Targeted Marketing: By understanding the specific segments, companies can create targeted marketing campaigns that resonate better with specific audiences.
2. Increased Sales: Tailoring products or services to meet the needs of particular segments can lead to higher sales and customer satisfaction.
3. Competitive Advantage: Businesses that effectively segment their markets often gain a competitive edge by serving niche markets more effectively than competitors.

Key Factors in Market Segmentation

• Socio-economic Class: Groups defined by income level and social status which influence consumer behavior and preferences.
• Age Groups: Different age demographics have varied interests and purchasing power, affecting how products are marketed.
• Geographical Regions: Regional differences can impact product demand and marketing strategies, catering to local preferences.
• Lifestyle and Interests: Understanding consumer lifestyles and hobbies can shape product offerings that align with their interests.
• Disposable Income: The amount of income available after taxes for spending can also determine market segment suitability.