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Market segmentation is the process of dividing a market into distinct subsets of
consumers who have common needs and priorities, and then designing and implementing
strategies to target them (Kotler & Keller, 2016). The most important concepts from this chapter
Market segmentation allows companies to better understand customer needs and desires.
By dividing the market into segments, companies can design specific products, services, and
marketing programs tailored to that segment.
Effective market segmentation requires segmenting the market into groups that are
measurable, accessible, substantial, differentiable, and actionable (Kotler & Keller, 2016).
Groups should be large enough to serve profitably.
Major segmentation variables include geographic, demographic, psychographic, and
behavioral. Demographic variables include age, gender, income, education, etc. Psychographic
variables include lifestyle, personality, values, and attitudes.
A company should target segments where it can profitably generate the greatest customer
value and sustain it over time. Evaluating segments involve …
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