What is the purpose of a market segmentation analysis?

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The purpose of a market segmentation analysis is to determine how a firm should split up, or segment, its overall market.

When firms set out to do this, they are hoping to be more effective in marketing their product to various parts of their customer base.  The firm does a...

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The purpose of a market segmentation analysis is to determine how a firm should split up, or segment, its overall market.

When firms set out to do this, they are hoping to be more effective in marketing their product to various parts of their customer base.  The firm does a market segmentation analysis to try to determine what segments exist in its market.  The firm is looking for discrete groups within that market that might respond to different marketing strategies.  Once the market segmentation analysis identifies these groups, the firm can tailor marketing strategies to the different needs of the various groups.

The purpose of a market segmentation analysis, then, is to find discrete groups in a market so that specific (and hopefully more effective) marketing strategies can be devised for each group.

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