Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations. Targeting or target marketing then entails deciding which potential customer segments the company will focus on. Marketing segmentation always comes before targeting, which helps a company be more selective about who they are marketing their products to.
The process of marketing segmentation and targeting are necessary to identify and target certain demographic groups. Customer demographics can include gender, age, income, household size, geographic area and even various ethnic groups. One or more of these demographic segments will be more likely to purchase a company’s products or services, while other demographic segments may be more suitable for competitive products or services. Companies that use marketing segmentation and targeting properly can usually expect great sales and profits.