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Market Segmentation Definition

Market segmentation – n : the process of subdividing a market into distinct groups of customers with similar needs, such that a subset of the market (a segment) can be selected as a target market and can be reached with a distinct marketing mix. One way to check the legitimacy of a market segment is to ask whether the customers in that segment are homogeneous and self-referencing (i.e., do they “talk to each other,” read the same publications, attend the same conferences, belong to the same professional associations, shop in the same places, etc.?); self-referencing groups of customers should be relatively easily and cost-effectively reached by a single marketing mix. Markets may be segmented: a) geographically (Where do they live?); b) demographically (i.e., according to age, race, gender, education, religion, etc.); c) psychographically (i.e., according to their interests, attitudes, opinions, and needs); and/or d) behavioristically (i.e., according to usage patterns, history, responsiveness or loyalty). (see also market segment)

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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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