Definition of Market Segmentation

Market segmentation is the process of dividing the market that a firm wants to target into groups that share similar characteristics based on their needs, demographics, interests, or location.

The purpose of market segmentation is to find the potentially most profitable segment and then focusing on that segment(s) and creating marketing strategies that will grab their attention towards a certain product or service.


Example of Market Segmentation:

A cell phone manufacturer wants to launch a cell phone that is built for gaming, it might divide its target market (that is aged from 14 to 46) into the following groups.

  • Teens who like playing games on cell phone
  • Teen who’s the primary purpose of buying the phone is the gaming
  • Adults who like certain networking games
  • Adults who play games on the phone on the weekend


The company might. Divide its target market into more groups, however, dividing the target market into segments or groups will be using full for the company to focus on one or more segments and offer the product with a certain mix of marketing efforts.

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