how market segments work
a market segment is a category of customers who have similar likes and dislikes in an otherwise homogeneous market these customers can be individuals families businesses organizations or a blend of multiple types market segments are known to respond somewhat predictably to a marketing strategy plan or promotion this is why marketers use segmentation when deciding on a target market as its name suggests market segmentation is the process of separating a market into sub groups in which its members share common characteristics to meet the most basic criteria of a market segment three characteristics must be present common characteristics of a market segment include interests lifestyle age gender etc common examples of market segmentation include geographic demographic psychographic and behavioral companies that understand market segments can prove themselves to be effective marketers while earning a greater return on their investments examples of market segments and market segmentationthe banking industry provides a very good example of how a company markets to specific market segments all commercial banks service a wide range of people many of whom have relatable life situations and monetary goals if a bank wants to market to baby boomers it conducts research and may find that retirement planning is the most important aspect of their financial needs the bank can then market tax deferred accounts to this consumer segment if the same bank wants to effectively market products and services to millennials roth iras and 401 k s may not be the best option instead the bank may conduct in depth market research and discover most millennials are planning to have a family the bank uses that data to market college friendly savings and investment accounts to this consumer segment sometimes a company already has a product but may not yet have its target consumer segment in this scenario it is up to the business to define its market and cater its offering to its target group restaurants are a good example if a restaurant is near a college it can market its food in such a way as to entice college students to enjoy happy hour rather than trying to attract high value business customers 