What is a Market Segment?

A market segment is a discrete group of individuals who bear a number of similar characteristics.

How Does a Market Segment Work?

A market segment is characterized as a homogeneous population within a given market whose members display similar responses to certain stimuli and bear distinct social, cultural, and economic features. For example, a market segment can be comprised of individuals of the same age group, interests, language and/or gender. Individual market segments are often classified as social, demographic and geographic.

Why Does a Market Segment Matter?

Companies use market segments as part of a marketing strategy. Understanding that a given product or service may be most marketable among a specific group, a company identifies the appropriate market segment. It then launches its advertising campaign so that it appeals to those who fall within that segment.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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