Necessary data for good market segmentation

“Beautiful product development in an ugly market segment simply makes no sense.” – Dan Adams, This is a lovely quote actually


The Market Analysis section of your Marketing Plan contains information about your target market, competitors, and marketing trends.

What is good market segmentation? Good market segmentation research should provide your company with a clear direction to move forward with an idea of which markets will be best to target. The market research shows to target should represent a high share of potential profitability to the company. It should also be easy to identify among the population of research.

If your market segmentation research is not meeting the above requirements, then that is what you’re doing wrong. You’ll need to re-gather your research team and clearly define their goals and the information they should be gathering from their market segmentation research.

Bad market segmentation research is a waste of your time, money and energy. These segments should be ones your competitors don’t even know exist (Which is very hard for our competition because markets are very common like Bahrain). This end goal will improve your marketing efforts and boosting your market share and profits. In parallel with market targeting, We should do customer segmentation also. You can identify your targeted market by asking:


First, Who are you selling to? Who are your ideal customers? Your target market should be defined in terms of demographics, psychographics, and niche markets ( i will explain them)

Demographics refers to the statistical data of a population, including average age, income, and education. Government census data is a common source of demographic information. Using demographic parameters is an effective way to segment your target markets. Think about the types of customers your business is targeting. If you have a regional product, perhaps your customers are located in certain cities or states. Your product may be targeted for businesses, individuals or both. As you brainstorm, you’ll start to recognize different groups forming.


Psychographics uses demographics to determine the attitudes and tastes of a particular segment of a population. Psychographics examines lifestyles: where people spend their vacations, where they shop, how they spend their disposable income, what sports they participate in or watch, which clubs/organizations they join, and more. so here we benefit from Psychographics as they analyse your customers’ values, personality traits, interests, attitudes and opinions. This information helps you build a clearer persona for each of your groups. Is your customer independent or does she long to feel included? What does she value? If you aren’t sure, hiring an outside market research company to run focus groups or conduct research surveys is a great way to gain more insight. Contacting a local business school to help is a less costly option.

Niche markets are a small segment of the population that shares common characteristics, interests, spending habits, etc. Successful niche marketing focuses on a small segment of a total market. It is the best strategy for a small business to achieve a market leadership position. It is expensive, and bland, to try to be all things to all people.

So, briefly in other words as I Understand it. To make a good market segmentation you have to collect these data

  • Psychographic: Grouping your customers into cultural clusters, social status, lifestyle and personality type.
  • Decision Makers: Grouping your customers based on who decides to purchase your product within the company structure.
  • Behavioral: Grouping customers by product usage. For example; light, medium or heavy users. This stage also factors in brand loyalty and the type of user.
  • Geographic: Grouping customers by a specific area, such regions of the country or state and urban or rural.
  • Distribution: Grouping customers based on where they go to purchase your product, such as online, store or through a catalog.
  • Demographic: Grouping customers by age, income level, gender, family size, religion, race, nationality, language, etc.

Don’t define your segments too broadly. This will give you a greater opening to a competitor who targets more narrowly.( a note from Delft Business planner 2016) So we can’t choose a whole continent for our prodeuct because it’s so hard to compete in such big place. You have to choose a single country in the first. Scientifically, Here is the steps we will follow to implement our market segmentation with an example of book shop ( It’s so illustrative)

Step One – Define the market

The first step in creating market segments is to clearly define the market of interest. As discussed in the markets, sub-markets and product-markets section, it is important not to define a market too broadly. let’s assume that you are looking to segment the market for a firm that operates a chain of book stores. It would be too top-level and too awkward to define the market as all retailing consumers, as it is unlikely to lead to any meaningful segmentation. ( an important reminder of Delft’s note) As shown here, we need to split out the overall broad market (retailing) into its various sub-markets (such as, supermarkets)

Step Two – Create market segments

Now that we have defined the product/market clearly (which we will refer to as ‘the market’ from this point on), we need to determine what types (segments) of different consumers form that overall market. To do this, we need to review the list of segmentation bases/variables and choose two or three of those variables that we think (or know from market research) affect the purchasing behaviour of book consumers.

For this market, let’s pick three different variables from the list, as per the following table. These particular segmentation variables have been chosen as they are likely to influence the purchasing behaviour of books and, therefore, should lead to the identification of interesting segments. Here, five different segments have been created by applying these segmentation variables. In the first stage, a broad demographic split has been used (to create children, young adults and older adults segment). The two adult segments then have a behavior variable applied to them (whether they enjoy shopping or just like to get in and out quickly).

Remember that are many ways to segment the same market. Provided that the segmentation variables have some logic to them, most outcomes should be quite acceptable.

Therefore, our five market segments in this example are:

  • Children
  • Young adults (18-40 years), who enjoy the shopping experience
  • Young adults (18-40 years), who are functional/convenience shoppers
  • Older adults (40+ years), who enjoy the shopping experience
  • Older adults (40+ years), who are functional/convenience shoppers

Of course you can map easily to our competition, young and old one.

Step Three – Evaluate the proposed market segments for viability

Now that we have developed some market segments we may be required to evaluate them to ensure that they are useable and logical. This would happen in a real-life firm, but it may not form part of your particular task. To do this, you need to quickly assess the segments against a checklist of factor. Basically, all that is required is to list the evaluation criteria and to provide a supporting comment, as is demonstrated in the following table. If, on occasion, the segments that you have created don’t appear to meet the evaluation criteria, then simply revisit step two and change the segmentation variables that you have selected.

Step Four – Construct segment profiles

You may be required to describe the segments (develop a segment profile). The following is a checklist of factors that you might consider. For some of these items below you may not know actually in that case either make a logical assumption or do not include the factor in the segment profile. Remember that the task here is to describe and understand the segments a little more

Step Five – Evaluate the attractiveness of each segment

If you are required to select one target market from you list of market segments, then you need to use some form of objective assessment but as a guide you should use some of the following factors in assessing the attractiveness of each market segment.

Financial Issues:

  • Segment size
  • Segment growth rate
  • Profit margins Structural Attractiveness
  • Competitors
  • Distribution channels

Step Six – Select target market/s

Using the assessment information, you have just constructed, you can select the most appropriate target market for the firm. While there are many factors to consider, you should at least take into account: the firm’s strategy, the attractiveness of the segment, the competitive rivalry of the segment, and the firm’s ability to successfully compete.