Market segmentation is an integral part of marketing, and nearly all marketers engage in segmentation even though they may not be aware they are doing so. Market segmentation makes its possible to tailor specific messages to specific consumers; this can be critical to the success of a product or service, particularly when the product or service has more than one use or more than one type of consumer interested in its use. Markets can be segmented along any number of parameters, including age, income or geographic distribution, and organizations that take the time and commit the resources to understanding their market segments can realize considerable benefit. This research examines the concept of market segmentation, and examines the various ways in which market segmentation is used in direct as well as conventional marketing techniques.
Market segmentation is, as the name suggests, the process of dividing a market into smaller subsections, or segments. However, this avoids the question of what constitutes a market. A market typically has four components, all of which must be present in order to consider the entity a market: a collection of people or organizations, with needs or wants, possessing the resources, and possessing the ability, to purchase the product or service in question. A market segment is a subgroup of that market composed of people or organizations that have similar characteristics or needs with respect to the product or service under consideration. At the most extreme, each individual is a single market segment since each individual has unique wants and needs. In general, however, companies group individuals together by demographic characteristics, or a preference for a specific use of a product (Lamb, et al 164).
Coca-Cola provides an example of how market segmentation works. For many years, the company sold a single product--Coca Cola. This product targeted consumers interested in carbonated bevera...