Market Segmentation

By John Dudovskiy
October 16, 2012

Market Segmentation To reach different markets or promote products or services to different locations or different people companies use a method called market segmentation. As Cumming (1994) explains, “Market segmentation describes the division of a market into homogenous groups which will respond differently to promotions, communications, advertising and other marketing mix variable.”

Therefore, market segmentation is very important for most of all companies around the world. If a company cannot reach the market or area they will success; or the product or service they provide too expensive so the market they are in cannot afford, surely that company cannot expect to prospers but even fails as a company.


Market segmentation

Market segmentation is to divide the market into smaller segments. The main reason behind the market segmentation is to make easier to address the needs of smaller groups of customers, particularly if they have many characteristics in common (Breen, 2003).

However, there are thing marketer needs to consider to see if a market must be segmented. The market in question must be large enough to segmented. Differences must exist between members of the market and these differences must be measurable through traditional collection methods (McElligiot, 2003).

Lancaster et al (2002) argues that there is no “golden rule” when it comes to segmenting consumer markets. The marketing firm might have to investigate using different segmentation variables in order to identify the overall structure of market. Often it may be necessary to use a combination of segmentation variables to define the precise market segment.

There are four variables commonly used for segmenting consumer markets:

  • Geographic segmentation
  • Demographic segmentation
  • Psychographic segmentation
  • Behavioural segmentation

The first two are geographic and demographic segmentations are physical attribute classification, which refers to the dividing of a market into groups based characteristics, such as location, population, country of origin, age, sex and income level. The other two are psychographic and behavioural segmentations, as their name suggests, behavioural and psychological attribute classification.  They do refer to the dividing of a market into different groups based on social class, lifestyle, personality, attitude or consumer knowledge, use and response to product (Terpstra, Sarathy, 2000).


Segmenting International Markets

However, many organisations operate very large markets. But operating in many countries present new challenges. After all, the different countries of world, even those close together, can differ in their economic, political, legal and cultural factors. (Marriotti, 2001). Such international firms recognise that because the market’s size so large it may not be possible to serve entire population of market effectively (Lancaster, Massingham, Ashford, 2002).

Moreover, it is obvious that world is not homogenous. Though some companies attempt a global “geocentric marketing” strategy many firms find it necessary to differentiate their marketing policies to a certain extent either on a country-by-country basis or by region.

Kotler et al (1999) suggests that large companies can segment international market using one or a combination of segment variables. They can segment according to geographic location, grouping countries by   region such as Africa, the Western Europe or South-east Asia. They can also segment by sub-cultural units, such as Arab world or Latin Americans.


Subculture and Sub-cultural Segmentation

Subculture can be defined as a group of people with shared value systems based on common life experiences and situations (Kotler et al, 1999). Members

Subcultures include nationalities, religions, racial groups and geographic regions. Following table shows examples of major sub-cultural categories:



Nationality Chinese, Russian, French
Religion Muslim, Christian, Hindi
Geographic region Eastern, Western
Race Asian, African, Caucasian
Age Teenagers, Pensioners
Gender Female, Male
Occupation Doctor, driver, cook
Social class High, Middle, Low

Members of a specific subculture share unique beliefs, values and norms of behaviour. Also, one’s belongings to which subculture are largely determined by where a person lives and subculture is rather a matter of choice.

Marketers segment overall societies into smaller subcultures. Usually, they use these cultural segmentation to determine a culture’s influence on a society as each of these cultural elements influence the consumption behaviour. Marketers should deeply be aware of cultural impacts on consumer behaviour (Keegan, 2002).

Moreover, sub-cultural analysis helps marketing managers to focus on sizable and natural market segments. Also, these analysis are will be useful for  marketers to decide whether the beliefs, values and customs shared by members of a specific sub-group make them candidates for special marketing attention.


The Implications of Sub-cultural Segmentations

Clearly shown that geographic segmentation assumes that nations close to one another will have many common traits, behaviours and characteristics. Though it is true in most cases, there are many exceptions. For example, many marketers believe that everything is the same in South America, including population of 400 millions. However, they absolutely wrong. Many Latin Americans do not speak Spanish, including 140 million Portuguese speaking Brazilians (Kotler et al, 1999).

Furthermore, it is important to remember that being a single geopolitical boundary does not necessarily mean a single culture. There are few countries either divided culturally or religiously. For example, in Nigeria, population is divided between Islam and Christianity, although the Nigeria is politically one country.

Another example is India. India is a vast and very diverse country, having many languages, cultures, religions, food habits and clothing styles etc. People live in north speak different language and even do not understand each other.



In a nutshell, it is important for international firms that entering to a foreign market or international market, taking into account the sub-cultural groups and focusing on their needs as many large international companies finding it increasingly difficult to operate in global stage and retain customers’ loyalty.

To be effective, after suitably researching the market , probably the most important this is to carry out the process of market segmentation in logical and systematic manner. If the process of market segmentation is carried out thoroughly, then the firm should benefit in terms of better competitive position for its products or services, resulting in greater sales and profitability. After all, the whole rationale of the marketing concept is increased business effectiveness through the provision of customer satisfaction.



  • Breen, Bill (2003), “Desire:  Connecting With What Customers Want”, Gruner + Jahr Publishing, USA
  • Cumming, Betsy (1994) “Cut Out For Success: Targeting Segments can Help You Claim a Bigger Share of the Overall Market”, accessed on
  • Kotler, Armstrong, Saundres, Wong (1999), “Principles of Marketing”, Prentice Hall Europe
  • Keegan, W.J. (2002), “Global Marketing Management”, Prentice Hall International Edition
  • Mariotti, L John (2003), “Maximize Your Marketing Dollars”,  accessed on
  • McElligott, Tuim (2003), “Customer Specific:  The Art and Science Behind Amdoc’s  Market Segmentation” Telephony, US
  •  “Subcultures and Consumer Behaviour”, accessed on
  • Terpstra, V. And Sarathy R. (2000), “International Marketing”, Dryden Press International
  • “The Self Reference Criterion and Ethnocentrism: Major Obstacles”, (2009), accessed on

Category: Marketing