Market Segmentation

Exam code: 7115

Written by: Ashika|Reviewed by: Caroline Carroll|Updated 2 July 2026

Market segmentation is where a single market is divided into submarkets, or 'segments'
- Each segment represents a slightly different set of customer characteristics
- This allows businesses to tailor products to suit specific groups, making customers more likely to buy
  - For example, a skincare company can offer different products for teenagers and older adults, who have different skin concerns
Marketing messages can be designed to appeal directly to each segment, making advertising clearer and persuasive
- For example, a fitness brand may use social media to target young adults, but email newsletters for older gym-goers
Focusing on specific segments helps businesses avoid wasting time and money advertising to people who are unlikely to be interested
- For example, a luxury brand avoids promoting its products to low-income customers who are unlikely to buy

1. Age

Businesses group customers by age, as different age groups tend to have different interests, needs, and spending habits
- For example, a toy retailer targets products like Lego at children aged 6–12, while mobile phone brands may market to teens using social media platforms like TikTok

2. Income

Customers are grouped based on how much money they earn. Some products are aimed at budget-conscious buyers, while others target higher-income customers willing to pay more
- For example, Primark sells low-cost clothing for price-sensitive shoppers, while brands like Gucci or Rolex target high-income luxury buyers

3. Location

This involves targeting customers based on where they live. Products and promotions may change depending on local tastes, climate, or culture
- For example, a surfwear brand might advertise more heavily in coastal areas, while supermarkets in colder regions may stock more winter foods during certain months

4. Gender

Some products are marketed differently to men and women based on preferences or roles in society, though this is now approached more carefully to avoid stereotypes
- For example, razor brands often sell separate product ranges for men and women, with different colours, packaging and advertising styles

5. Lifestyle

Lifestyle segmentation focuses on people's interests, hobbies, values, or how they spend their time
- For example, a supermarkt may target protein shakes at people who are fitness-focused, while promoting eco-friendly cleaning products to environmentally conscious consumers

Case study

Segmentation in the crisps market

The crisp market is not one single market
- It is divided into distinct market segments, based on customer needs, preferences, income levels, and lifestyles
Different crisp brands target different segments

Segment	Description	Example brands
Health-conscious consumers	Targeted at people looking for low-fat, low-calorie, or baked alternatives as part of a healthier lifestyle	Walkers Baked Popchips Eat Real Snack a Jacks
Premium buyers	Targeted at higher-income or more brand-conscious consumers They want a premium product with unique flavours or artisanal packaging	Kettle Chips Tyrrells Walkers Sensations Burts
Value-seeking families	Aimed at the mass market, especially families buying in bulk for packed lunches or general snacking at an affordable price	Walkers multipacks Hula Hoops Space Raiders Pom Bear
Youth and casual snackers	Designed to appeal to children, teens, and younger adults through bold flavours, fun shapes or branding	Monster Munch Quavers Wotsits
Event and sharing occasions	Larger packs or stackable tubs intended for social situations such as parties or movie nights	Pringles Walkers Max Share Bags

Advantages	Disadvantages
Recognises that consumers are not all identical; consumer groups do not all share the same tastes and preferences Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely Less expensive and wasteful than marketing products at wide market segments It may increase loyalty if the consumer feels that their needs are being met, which can lead to repeat purchases	Not everyone within a segment will behave in the same way It may be difficult to identify a segment and consumers can belong to multiple segments at the same time Segmentation requires more detailed market research, which can prove costly but beneficial to the business A segment may be identified but it may be too small and unprofitable to cater to

Advantages

Disadvantages

Recognises that consumers are not all identical; consumer groups do not all share the same tastes and preferences
Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely
Less expensive and wasteful than marketing products at wide market segments
It may increase loyalty if the consumer feels that their needs are being met, which can lead to repeat purchases

Not everyone within a segment will behave in the same way
It may be difficult to identify a segment and consumers can belong to multiple segments at the same time
Segmentation requires more detailed market research, which can prove costly but beneficial to the business
A segment may be identified but it may be too small and unprofitable to cater to

Why businesses segment the market