Markets can be segmented or targeted on a variety of factors including age, gender, location, geographic factors, demographic characteristics, family life cycle, desire for relaxation or time pressures. Segments or target markets should be accessible to the business and large enough to provide a solid customer base. A business must analyze the needs and wants of different market segments before determining its niche. Market segmentation is dividing a larger market into submarkets based upon different needs or product preferences. A key factor in competitive success is focusing on little differences that give a marketing edge and are important to customers.
Market segmentation matches consumer differences with potential or actual buying behavior.
It may prove more profitable to develop smaller market segments into a target segment. Profile Customers Analyze market segments. Also, consider frequency or regularity of purchase, amount of purchase, brand loyalty, attitudes toward the product or brand, use of cash, check or credit card, or customer's desire for personal friendship with business personnel. Ask questions important to your business interests. Try to identify types of customers and the benefits they need and want.