Not all products manufactured by businesses are suitable for all consumers. It is always easier and more cost-effective to concentrate on a limited group of consumers launching a new product. The qualities of the product and its application define a certain segment of consumers who will be interested in purchasing these particular goods. In business, they are called a target market. Some target markets are wider, the others remain quite narrow, but it is impossible for businesses to target at all people in their home country or abroad. Companies invest time and money in defining and monitoring their target market that depends on geography, demographics, and a buying power of individuals.
Geographic segmentation of the market helps to define places where people may be interested in certain products. Some businesses target at local areas while the others choose to export their products abroad. The precise geographic segmentation determines the demand: even products of the highest quality may have no interest of the consumers if they are inapplicable in their area.
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Demographic segmentation encompasses a wider range of criteria. Here belong gender, age, education, occupation, religion of population etc.. Manufacturers of alcohol, for example, target at the consumers of the particular age as younger and older adults prefer different types of alcoholic drinks.
Another type of market segmentation is psychographic division. Consumers are differentiated according to their socio-economic class. From upper middle class to working class, people have a different buying power, and awareness of the social status inherent to every target market is crucial for businesses.
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