Market Segmentation

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 p

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ame implies, takes the marketing message directly to the consumer. Catalogs mailed to homes provide an example of direct marketing: the marketing message is taken directly to the consumer, and the consumer is able to make a purchase decision without additional interaction with a middleman--such as a retailer or distributor. Infomercials--which have become the dominant form of late-night television in the United States--are another form of direct marketing. Direct mail is a common form of direct marketing, and for many years, direct mail relied on generic market segmentation strategies. The same direct mail piece would be sent to all consumers in a particular geographic location, or to all bank presidents--if they were the target market--or some other type of segmentation would lead to mass production of a single direct mail piece. In most cases, a response rate of between two and three percent would be considered successful. However, the recent significant increases in computer technology means that segmentation can now be performed on a much more specific level. Thus, two consumers receiving direct marketing materials from the same company--and this now might include e-mail--may receive different materials even when the c

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