Definition:
A "market" is a universe of customers or clients who are interested in a particular product, service, or company. The market is made up of sub-sets that share particular product or service demand characteristics. Market segmentation is the process by which these sub-sets of the market are identified in order to target advertising and marketing campaigns based on shared preferences. A market segment must be distinguishable from the rest of the target market, must exhibit homogeneous product or service needs or desires, and segmentation members must respond to similar advertising and marketing campaigns.
Examples:
Markets may be divided into segments by looking at their demographics, economic status, geographical location, and behavioral attributes. The distinctions made among different generations of Americans are an example of market segmentation by demographics. In order for target marketing to be more effective with these generational groups, further refinement along other attributes are necessary. For example, not all baby boomers respond to the same marketing strategies.
