Market segmentation is a set of actions necessary for dividing specific markets and consumers’ groups and subgroups into categories based on their specific characteristics. The main mission of the process is to identify potentially profitable and scalable market segments.
For marketers, segmentation comes as the process of the aggregating target audience into classifications following equal demands and needs in terms of consumption tendencies. For investors, segmentation provides extended market research with the chance to identify the most favorable niches and companies from an investing perspective.
Either you are an investor or business owner, market segmentation is a crucial stage of development. It helps to identify the most favorable sector within different market segments.
No matter which side you belong to, segmentation requires in-depth market analysis and understanding of some financial and economical basis.
Proper segmentation makes it possible for organizations to leverage sales and enhance some of their promotion or ad campaigns. A company that has a market well-segmented comes with huge competitive advantages and a clear direction to scale business. This is where business owners need to clarify several baseline segmentation types:
To recognize different market segments, they have to meet three baseline criteria. The first one involves homogeneous subgroups. Secondly, each member of the subgroup or element of the segment must feature equal characteristics. Last but not least, a certain segment is supposed to have a similar response to implemented market strategies and techniques.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.