Segmentation analysis

Segmentation analysis is a way of dividing up a market to identify trends in it. Segmentation analysis is used to create a profile of the target market. The following can be taken into account when segmenting a market:

• Age,
• Gender,
• Class,
• Income,
• Location,
• Hobbies.

This information can help the company a lot with its marketing efforts. It can be used to set quotas on a market research exercise or be used to decide what promotional method is most appropriate for the market.

In general, the following are advantages of segmentation:

• More efficient use is made of marketing resources - less waste.
• A competitive advantage can be gained in a particular part of a market.
• It's beneficial for small firms as uses less resources.
• Products can be modified to be exactly what the consumer wants.
• Marketing mix can be more targeted.

The following are disadvantages of segmentation:

• Increased costs to develop variations of the product.
• Higher stock holding costs.
• Higher advertising and other costs.