Market segmentation is the process of dividing an entire market up into different customer segments. Targeting or target marketing then entails deciding which potential customer segments the company will focus on. Marketing segmentation always comes before targeting, which helps a company be more selective about who they are marketing their products to. Marketing segmentation and targeting are equally important for ensuring the overall success of a company.

Significance

Marketing segmentation and targeting are particular important for finding customers that are the best match for a business's products and services. It is not feasible to go after all customers, because customers have different wants, needs and tastes. Some customers want to be style leaders. They will always buy certain styles and usually pay a high price for them. Other customers are bargain shoppers. They try to find the lowest price. Obviously, a company would have difficulty targeting both of these market segments simultaneously with one type of product. For example, a company with premium products would not appeal to bargain shoppers.

Identification

The process of marketing segmentation and targeting are necessary to identify and target certain demographic groups. Customer demographics can include gender, age, income, household size, geographic area and even various ethnic groups. One or more of these demographic segments will be more likely to purchase a company's products or services, while other demographic segments may be more suitable for competitive products or services. Hypothetically, a certain new radio station may discover that their music appeals more to 34-to-54-year-old women who earn over $50,000 per year. The station would then target these women in their marketing