What Is Effective Consumer Market Segmentation? 5 Bases And 4 Important Segmentation Variables.

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A typical consumer market is made up of individuals and households that purchase goods and services for personal and household consumption.


Every consumer market has buyers that differ in several ways that makes market segmentation necessary.

Market segmentation is the conscious effort of dividing a total market into groups (or segments) of people who share similar consumption or product needs.


That is, market segments or subsets have people with similar purchase behaviour that is influenced by similar wants and other similar buying characteristics.


Effective market segmentation is a very important determinant of a good market strategy.

A good market segmentation is a reliable guide for putting consumers with similar valuation of products into easily differentiated groups.

Why is this useful for the purpose of crafting an effective market strategy?

  1. It should help business focus its marketing efforts on the market segment where it has a competitive edge,

2. It should also help business reduce or eliminate the wasting of funds on marketing campaigns that wouldn’t yield significant commensurable results.


Now, for a market segmentation to be effective, it must satisfy some criteria. What are these bases?

  1. Substantiality: A business’s target segment must have a large enough sales potential that guarantees profitability.


There should not be separate marketing programs for any identified market segment that wouldn’t produce high sales volume.

2. Actionability: After identifying target market segments, a business should assess its capacity to effectively serve them.


Does the business have the resources or would it have to get more resources at additional costs to serve identified market segments?


A thorough cost-volume-profit (CVP) analysis should be carried out before funds are committed to develop new marketing programs to serve identified segments.

3. Measurability: This refers to the degree to which the size and purchasing power of segments could be assessed.


Buyers’ attributes (especially income and age) on which segmentation would be made should be measurable with reliable accuracy.

4. Accessibility: How easy would it be to reach and effectively serve identified and selected market segments?


Here, a business would have to objectively evaluate its marketing communication strategies and distribution channels.

Where accessibility would be difficult, efforts and funds shouldn’t be wasted on market segmentation.

5. Differentiability: Before dividing up a market into segments, different marketing programs should be used to test responses of hypothetical segements.

If different strategies and programs receive similar responses from hypothetical segments, then market segmentation is unnecessary.


It should be noted that there’s no one-size-fits-all market segmentation strategy. Different segmentation variables should be tried in turns until the one that identifies best market opportunities is found.


The major segmentation variables are;

  1. Demographic segmentation: Demographic variables such as age, sex, family life cycle, income, family size, education, religion and nationality are used to divide a market into segments.


Consumer preferences and wants are regularly associated with demographic variables. This is why these variables are popular.

2. Behavioristic/product-related segmentation: For many marketing experts, product-related variables should be the starting point for creating effective market segments.


They believe that benefits sought, purchase occasion and loyalty status are revealed when buyers are grouped on the basis of their knowledge, response and attitude to an actual product.


It’s believed that by observing a buyer’s present behavior, a deeper understanding of their buying motive is possible.

3. Geographic segmentation: Here, the market is divided into different geographical entities.


This segmentation is based on the assumption that buyers’ needs vary geographically.


A business that uses this form of segmentation concentrates on geographical entities with the highest market potentials and lowest costs (and threats).

4. Psychographic segmentation divides buyers into market segments on the basis of social classes, personality attributes and lifestyles.

It’s important to note that demographics are usually silent on lifestyles and attributes.

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