Editing Market segmentation (section)

{{Short description|Process in marketing}}
{{marketing}}
{{EngvarB|date=July 2018}}

In [[marketing]], '''market segmentation''' or '''customer segmentation''' is the process of dividing a consumer or business [[market (economics)|market]] into meaningful sub-groups of current or potential [[Customer|customers]] (or [[consumer]]s) known as ''segments''.<ref name=":1">{{Citation |last=Diaz Ruiz |first=Carlos A. |title=Market Segmentation |date=2024-06-13 |work=Elgar Encyclopedia of Consumer Behavior |pages=195–197 |url=https://www.elgaronline.com/display/book/9781803926278/ch60.xml |access-date=2024-06-14 |publisher=Edward Elgar Publishing |doi=10.4337/9781803926278.ch60 |isbn=978-1-80392-627-8|url-access=subscription }}</ref> Its purpose is to identify profitable and growing segments that a company can target with distinct marketing strategies.

In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles, or even similar [[demographic profile]]s. The overall aim of segmentation is to identify ''high-yield segments'' – that is, those segments that are likely to be the most profitable or that have growth potential – so that these can be selected for special attention (i.e. become [[target market]]s). Many different ways to segment a market have been identified. [[Business-to-business]] (B2B) sellers might segment the market into different types of [[business]]es or [[country|countries]], while [[business-to-consumer]] (B2C) sellers might segment the market into [[Demography|demographic]] segments, such as lifestyle, behavior, or socioeconomic status.

[[File:STP approach.jpg|thumb|300px|The STP approach highlights the three areas of decision-making.]]

Market segmentation assumes that different market segments require different marketing programs – that is, different offers, prices, promotions, distribution, or some combination of marketing variables. Market segmentation is not only designed to identify the most profitable segments but also to develop profiles of key segments to better understand their needs and purchase motivations. Insights from segmentation analysis are subsequently used to support marketing strategy development and planning. 

In practice, marketers implement market segmentation using the [[Segmentation, targeting and positioning|S-T-P framework]],<ref>{{Cite journal |last=Diaz Ruiz |first=Carlos A. |last2=Kjellberg |first2=Hans |date=2020-12-01 |title=Feral segmentation: How cultural intermediaries perform market segmentation in the wild |url=https://journals.sagepub.com/doi/10.1177/1470593120920330 |journal=Marketing Theory |language=EN |volume=20 |issue=4 |page=430 |doi=10.1177/1470593120920330 |issn=1470-5931|url-access=subscription }}</ref> which stands for Segmentation → [[Targeting (advertising)|Targeting]] → [[Positioning (marketing)|Positioning]]. That is, partitioning a market into one or more consumer categories, of which some are further selected for targeting, and products or services are positioned in a way that resonates with the selected target market or markets.

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