Consumer Rationality and Economic Basis of Market Segmentation The statement that “consumer is always a rational human being” and therefore economic basis is the most appropriate method of segmentation is only partly correct. Consumer behaviour is influenced not only by income, purchasing power and economic status but also by psychological, social, cultural and personal factors. Hence, economic segmentation is important, but it cannot be considered universally superior to other methods of market segmentation. Market segmentation means dividing a heterogeneous market into smaller groups of consumers having similar needs, characteristics or buying behaviour. The economic basis generally classifies consumers according to income, purchasing power, occupation, economic status and spending capacity. For example, automobile companies offer different products for different income groups. Luxury brands such as Mercedes-Benz and BMW primarily target high-income consumers, while brands such as Maruti Suzuki target middle-income and price-conscious consumers. Similarly, premium hotels, luxury watches and high-end smartphones are largely marketed towards consumers with greater purchasing power. The economic basis is useful because income strongly affects what consumers can afford and how much they are willing to