Market segmentation

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Businesses need to know what types of people buy the goods/services they produce. Businesses try to identify different market segments. A market segment is a part of a market that contains a group of buyers with similar characteristics. If a business knows what market segment its customers are in, it can target adverts or new products specifically at them and this will help it gain an advantage over their competitors and increase their sales, e.g., products aimed at teenagers during Hollyoaks or in magazines read by teenagers and products aimed at A and B income brackets they may choose to advertise in the Times.

Age

Young middle aged and old people all have different tastes and wants. Just because young people like something does not mean that old people will as well, for example young people are more likely to buy pop music CDs.

Gender

Men and women do not have the same likes and dislikes, for example women will buy more beauty products than men.

Social class

Different social classes will have varying demand for all products, for example people in A and B are more likely to buy luxury foreign holidays. The following classes are identified by government statisticians: A - Higher managerial or professional, e.g., doctors, lawyers. B - Middle managerial or professional, e.g., teachers, bank managers. C1 - Supervisory and junior management, e.g., bank clerks, nurses. C2 - Skilled manual workers, e.g., electricians, plumbers. D - Semi and unskilled worker, e.g., labourers. E - Pensioner, lowest paid workers or unemployed.

Area

People in different areas of the country have different tastes, for example Rugby League merchandise is more popular in the North of England. Likewise, there is no point selling Manchester United shirts outside Anfeild Stadium, because no-one there will want to buy one.

Ethnic, cultural and religious groups

Different groups have different tastes and desires.

Lifestyle

It is possible to identify different groups of people with different lifestyles, for example, there are those who like to go out shopping and socialising spending their income, whilst others choose to save. Other life styles can be identified based upon whether or not you have children, religion or sexuality.

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