Market segmentation

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A market segment is a classification of potential private or corporate customers by one or more characteristics, in order to identify groups of customers, which have similar needs and demand similar products and/or services concerning the recognized qualities of these How to export products, e.g. functionality, price, design, etc.

An ideal export marketing or market segment meets all of the following criteria:

  • It is internally homogeneous (potential customers in the same segment prefer the same product qualities).
  • It is externally heterogeneous (potential customers from different segments have basically different quality preferences).
  • It responds similarly to a market stimulus.
  • It can be cost-efficiently reached by market intervention.

The term segmentation is also used when customers with identical product and/or service needs are divided up into groups so they can be charged different amounts for the services.

A customer is allocated to one market segment by the customerĀ“s individual characteristics. Often cluster analysis and other statistical methods are used to figure out those characteristics, which lead to internally homogeneous and externally heterogeneous market segments.

Examples of characteristics used for segmentation:

  • Gender
  • Price
  • Interests
  • Location
  • Religion
  • Income
  • Size of Household

While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop different ways of imagining market segments, and create Product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage.



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