Essay: How to perform market segmentation and targeting
Market segmentation is term used in economics to describe the division of markets into subsets that will suit different sets of the targeted customers. It can be divided into categories that may include price, age, sex and the interests of the different customers. In order to understand how to do market segmentation it is of paramount importance to note the type of customers one is projecting his or her goods or services to. For example, since a small business acknowledges the fact that its customers are limited so it is important to identify the said customers and try as much as possible to identify the needs of their clientele. The identification process of the said clientele is what is referred to as targeting. (Craft 2009)
The product being developed has to be refined in order to be in a position to meet the specific needs of the targeted customers. It is important to acknowledge the fact that people purchase products for the purposes of “fulfilling their basic needs, to make them feel good and at the same time solve their problems.” (Gupta 2005 pp 24) In order to make a successful market segmentation one ought to understand what problem his product will solve in the interests of the customer. Some products can even be able to solve all the three problems for the customer while others can solve either one or two of the problems. For example in the eco-tourism business a service provider may decide that the will be no alcohol on board. This requirement will eliminate those who are alcohol lovers and thus the target market will be the teetotalers.