Market segmentation is the division of a market into different groups of customers
with distinctly similar needs and product/service requirements. Or to put it another
way, market segmentation is the division of a mass market into identifiable and
distinct groups or segments, each of which have common characteristics and
needs and display similar responses to marketing actions.
Market segmentation was first defined as ‘a condition of growth when core
markets have already been developed on a generalised basis to the point where
Market
Segmentation
(S)
Target
Market
(T)
Brand/Product
Positioning
(P)
Market
Information
Marketing
Decisions
Identifying
similar
groups of
customers
Identifying
which
groups of
customers
to aim for
Creating a
concept to
appeal
to the target
market
Market
Information
Marketing
Decisions
Market
Research Creative
e.g. male/female
business
students aged
18−25, 26−35,
36−45, 46+
e.g. female
business
students
26−35
e.g. position HE
as internally
rewarding and
personal
development
Figure 6.1
The STP process
6 Market Segmentation and Positioning 217
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additional promotional expenditures are yielding diminishing returns’ (Smith,
1956). There is now widespread agreement that they form an important foundation
for successful marketing strategies and activities (Wind, 1978; Hooley and
Saunders