Segmenting Business Market 

Market segmentation is the process of dividing a market into groups, known as segments, of customers with similar needs or characteristics who are likely to exhibit similar purchase behavior. In segmenting the market the business is acknowledging that different 'types' of buyers may require different products or marketing approaches marketing mixes.

Whilst a mass marketing approach will treat the market as a whole providing one version of the product and one marketing mix for all buyers in the market. Market segmentation enables the business to target different groups of buyers by adapting its product and marketing mix to best suit each targeted segment. A good example of this approach can be seen in the mobile phone industry.

The purpose for segmenting a market is to allow a firm's marketing/sales program to focus on the subset of prospects that are "most likely" to purchase offering. If done properly this will help to insure the highest return for the marketing/sales expenditures. Depending on whether the firm is selling to individual consumers or a business, there are definite differences in what the firm will consider when defining market segments.

The most commonly used bases for segmentation:

• Geographical bases
• Demographic bases
• Psychographic bases
• Behavior bases  

Geographic segmentation divides the market into different geographical units, be they neighborhoods, cities, counties, countries, or world regions such as Europe or South East Asia etc. Demographic segmentation divides the market into groups based on demographic variables including age, gender, family size and life cycle. Psychographic segmentation divides the market into groups based on social class, lifestyle and personality characteristics. It is based on the assumption that the types of products and brands an individual purchases will reflect that persons characteristics and patterns of living. Behavioral segmentation divides the market into groups based on their knowledge, attitudes, uses and responses to the product.