Market Segment

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With technology, businesses are now able to reach a large and diverse audience due to commercials, print ads, cell phone apps, and banners or popups on the Internet. Therefore, because business owners realize that their audience has expanded, they often rely on marketers to help them develop effective ways to sell their products or services. Formerly, marketers relied on the four components of product, price, promotion, and place to determine an effective marketing communications strategy, but now segment marketing has allowed them to develop specific draws for a definite market. 

If businesses understand who would be most likely to purchase their products or services and target that specific audience, they may outsell their competition and develop consumer loyalty. Business Owner's Toolkit (2012) reported: “‘20 percent of buyers consume 80 percent of product volume’” (from section “Segment Your Market to Drive Growth”). Usually, businesses can depend on this percentage because business owners consider the 20 percent to be loyal buyers. Therefore, it is the marketing team’s role to keep this key group interested. 

Specifically, the 80-20 rule proposes that inelastic demand offers a steady flow of revenue because it is based on loyal customer demand. Loyalty suggests customers will continue to buy from a particular seller regardless of price variations. In addition, when marketers utilize the 80-20 rule, Kruger (2011) revealed that they “will learn to segment [their] customers by their profitability and to replace less profitable customers with highly profitable, new customers” (p. 21). Subsequently, elastic demand-type consumers are not a steady supply of revenue because they are fickle buyers who usually determine their purchases based on price. 

Businesses have found that market segmentation is a crucial component of the marketing process because it categorizes specific target audiences. Burrows (2012) asserted that “The key to success is to properly segment the market and then set a strategy for each segment” (p. 19). In other words, instead of dividing groups by gender, market segmentation would go further and categorize each gender by their incomes or lifestyles and decide on a strategy for that specific audience. Identifying the demographics, psychographics, lifestyle, beliefs, values, and life stages of buyers and dividing the market into sections or "segments" can help [businesses] generate more revenue” (Business Owner's Toolkit, 2012, from section “Segment Your Market to Drive Growth”). It is imperative to consider each of these elements because targeting only one specific, such as demographics, will not reveal the subtle buying patterns that lifestyle dictates.

Initially, marketers should conduct primary research that investigates a business’s internal attributes and external components (Burrows, 2012). Internal research will reveal a business’s strengths and weaknesses while external research will discover its target audience’s buying behaviors, likes, and dislikes. Burrows (2012) explained that internal research consisted of internal data and qualitative testing, such as interviews. After internal research, the business performs external research to find quantitative information from sources such as internet resources or customer discussions (Burrows, 2012). Quantitative data, such as demographics, allows marketers to factor in the number of possible buyers. On the other hand, qualitative data will evaluate factors such as lifestyles. While researching both is effective, when planning to develop a marketing plan segmentation strategy, businesses should take into account their individual consumers’ buying habits because that will reveal the group that is more likely to be loyal consumers. 

Howell (2012) suggested that knowing how individual consumers behave allows a business “to become a customer-centric organization; that is, to make the customer an integral part of their organization's strategy and decision-making” (p. 3). In addition to considering buyer’s habits, marketers should evaluate the target audience’s access to product delivery and have a direct connection to the advertising media marketers propose to use such as radio, television, internet, or print. 

As an illustration, Business Owner's Toolkit (2012) revealed small convenience store owner Jim realized that the neighborhood soccer teams used concession stands during their games, but they did not sell refreshments during the practices, so he developed ‘soccer parent’ grab bags (Business Owner's Toolkit, 2012). Ultimately, his sales took off because he recognized a need for a specific group and provided their wants. Because Jim knew that their lifestyle consisted of accompanying their children to soccer practices, he was able to predict the number of buyers. However, large organizations require more involved marketing segmentation. In another example, Business Owner's Toolkit (2012) reported that an athletic shoe manufacturer realized their typical consumer were sports fans, so they used athletes in their promotional media. Jim and the shoe manufacturer successfully targeted a reliable consumer in order to increase their revenue. Therefore, if marketers “test against rigorous profit-related criteria to identify key market drivers” (Clancy & Bowen, 2012, p. 121) then analyze, evaluate and finalize the “financially optimal segmentation and targets” (Clancy & Bowen, 2012, p. 121), they will reveal optimal strategies for business marketing plans.

While larger corporations will use more than a marketing manager and researcher to effectively segment their markets, market segmenting is a reliable method for small business owners and large organizations to locate target audiences who will continue to buy. Ultimately, if business owners want stable revenues, market segmentation will reveal their ideal sources.


Burrows, R. P. (2012). The market-driven supply chain: A revolutionary model for sales and operations planning in the new demand economy. New York: AMACOM. Retrieved from EBSCO.

Business Owner's Toolkit. (2012, May 24). Understanding your target market is critical for success. Business Owner's Toolkit Biz Filings. Retrieved from

Clancy, K., & Bowen, A. (2012). State-of-the-science market segmentation. In Kaden et al. (Ed.), Leading edge marketing research : 21st-century tools and practices (pp. 119-131). Sage.

Howell, R. (2012). Market segmentation: The importance of age cohorts. The Neumann Business Review, 1-34. Retrieved from

Kruger, E. R. (2011). Top market strategy: Applying the 80/20 rule (1st ed.) [In Marketing Strategy Collection]. New York: Business Expert Press.