Market Modeling and Segmentation


Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.


  • Mass marketing: Same product to all consumers
    (no segmentation, i. e. a commodity)
  • Segment marketing: Different products to one or more segments
    (some segmentation, i.e. Marriott)


Geographic Segmentation: International, national, regional / city.

  • Dividing the market into groups based on variables such as age, gender, family size or life cycle, income, occupation, education, religion, race, generation, nationality
  • Dividing buyers into different groups based on social class, lifestyle, personality
  • Dividing the market into groups based on variables such as occasions, benefits, user status, usage rate, loyalty status, readiness stage, attitude toward a product
  • Segments must respond differently to different marketing mix elements & programs.

Requirements for effective segmentation:

  • Measurable (Size, purchasing power, profiles  of segments can be measured)
  • Accessible (Segments can be effectively reached and served)
  • Substantial (Segments are large or profitable enough to serve)
  • Actionable (Effective programs can be designed to attract and serve the segments)

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