Question

9) Why and how do businesses segment their markets? Identify a product where you believe your own demographic is targeted as a primary customer.

Answer 1

Market segmentation can be defined as the classification of prospective and potential consumer groups, as per their requirements and their tendencies to give a similar response to a specific marketing action. It helps companies to gain a better understanding about their customers. It acts as a useful tool through which the company may divide the homogeneous consumer market according to the sizable proportion into more defined segments. Business can segment their markets in five basic forms - demographic (based on age, income, race, education, gender, social class, household size); benefit (based on benefits provided), geographic (based on regional location, city or county size, climate, and density of population - urban, suburban or rural); psychographic (based on lifestyle, values, personality, interests, attitudes); and volume (based on heavy versus light)

A demographic targeted market would take into consideration the factors such as customer size, type of products, number of employees, and annual revenue. An example of demographic profile for a business is Liz Claiborne Apparel Company. The company named their demographic target market to be Liz Lady based on Liz Lady’s profile. They know Liz Lady’s income range, age, family status, professional status, hobbies and interests. Another example of targeting through demographics will be a real estate developer selling near Walt Disney World the luxury vacation homes that considers the professional married couples nearly the 30 to 45 years old with young kids, and the incomes exceeding $100,000.