UNDERSTANDING THE MARKET

1. What is a Market?
• A environment in which two or more parties participate in the exchange of goods,
services, and information is called a market. Ideally a market is a place where two or
more people are interested in the buying and selling.

• The two parties involved in a transaction are called seller and buyer.

• In return for money the seller sells goods and services to the buyer. In the market to be
competitive, there needs to be more than one buyer and seller.
2. What is Segmentation?
“Segmentation refers to a process of bifurcating or dividing a large unit into various small
units which have similar or related characteristics.”
Market Segmentation
• Market segmentation is a marketing term dividing the entire market into smaller subsets
of customers with specific tastes, demands and expectations.
• A market segment is a small unit composed of likeminded individuals within a large
market.
• One segment of the industry is absolutely different from the other.
• A market segment includes individuals with common preferences and thinking along the
same lines.
• Individuals from the same group react in a manner similar to market fluctuations.

Basis of Market Segmentation Gender

• Marketers are separating the market into smaller, gender-based divisions. Men and
women have different desires and expectations, and thus require segmentation.
• Companies need different marketing approaches for men which obviously will not work
for women.
• A woman does not buy a product intended for men and vice versa.
• Gender segmentation is significant in many industries such as cosmetics, clothing,
jewelry.

Age Group
Division based on age group of the target audience is also one of the ways of market
segmentation.
 • The products and marketing strategies for teenagers would obviously be different than
kids.
• Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams
• Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags
• Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines,
apparels etc.

Income
Marketers divide the consumers into small segments as per their income. Individuals
are classified into segments according to their monthly earnings.
The three categories are:
• High income Group
• Mid Income Group
• Low Income Group

2. Types of Market Segmentation

Psychographic segmentation
• Individual behaviors are the basis for such segmentation. The attitude, interest, and
value of the individual enables marketers identify them into small groups.
Behavioral Segmentation
• Consumers' loyalties to a brand help advertisers divide them into smaller groups, each
category consisting of individuals loyal to a brand.
Geographic Segmentation
• Geographic.segmentation.refers.to.the.classification.of.market.into.various.geographical
.areas..A.marketer.can.‘t.has.similar.strategies.for.individuals.living.at.different.places...