The definition of market segmentation isn’t consistent across the industry. For instance, my definition of market segmentation and many related terms slightly differ from many marketers.
So I start this post with the following two explanations and then provide a list of terms.

• Some Market Segmentation Definitions Are Confounded
• Market Segmentation Needs Operational Definitions

Some Market Segmentation
Definitions Are Confounded

Some market segmentation terms are confusing and, what we researchers call, confounded. A confounded term is one that represents two different concepts.

The problem with confounded terms is that you never know which concept is being referred to when another person uses a term like market segmentation. This makes for unclear communications and increases the chance of misunderstandings. When conducting research of any kind, it’s necessary to define a term like market segmentation to consistently refer to one and only one concept.

Market Segmentation
Needs Operational Definitions

In all research, it’s necessary to use operational definitions. Operational definitions are measurable and clearly delineate terms.

I define some research terms like “variables” and “levels of variables” here because understanding the research terms aids your understanding of market segmentation terms, and why I define terms related to market segmentation as I do.

I also define a few marketing terms, not specific to market segmentation, but used in posts in this blog.

I cover the terms alphabetically. That is not the most logical way to think of the terms, but it does provide the most efficient way for you to use this list of market segmentation definitions as a reference. This organizational choice may sometimes require that you read other definitions in order to fully understand one definition. In such cases, the other definitions are italized within the one definition that is bolded.

Market Segmentation Terms

Demographics: What I frequently refer to as demographic characteristics are variables based on factual information about subjects. These include age, income level, type of occupation, level of education, gender, national origin, race, etc.

Generalize: This is the ability to extend findings from a group of test subjects to a larger population. Certain statistical requirements are necessary to generalize.

Levels of Variables: Because variables are measurable, the concepts measured by them can have different ranges of values. In order to research the influence of different levels of variables on subjects, every level of a variable has to be distinct from every other level. No test subject can be in more than one level of a variable and every subject has to be in at least one level of a variable.

Market fragmentation: Market fragmentation represents a way of separating the people most likely to buy what you sell from the market at large.

Market segment: Although many marketers define a market segment to mean the people most likely to buy what you sell or the part of the market that you are targeting. I believe this is confusing because that is also called a target market. I separate these terms and define a market segment, in research terms, as a level of a variable. For example, there are four levels of adult generations in the USA today. Generations is a variable. Each of the four generations is a level of that variable.

Market segmentation: Many marketers define the concept that I call market fragmentation as a part of market segmentation, but I distinguish these terms and define market segmentation as the process of organizing subjects into levels of variables in order to generalize about them and their behaviors.

Market segmentation research: I use this term to define all research involved in market fragmentation and market segmentation.

Market segmentation theory: This is the theory that people differ by demographic, psychographic, sociographic variables and that their buying behavior and successful marketing appeals relate to those variables.

Marketing strategy: A marketing strategy is a plan for reaching marketing goals or objectives.

Marketing tactics: Marketing tactics are specific actions to be taken in order to implement a marketing strategy.

Matrix market segmentation process: This is my process of determining the best appeals for a target market by selecting its appropriate market segments, tabling the characteristics for each segment and looking for repeated characteristics across segments to predict successful marketing appeals.

Primary research: This is research designed and conducted to answer a specific question or to test a specific hypothesis. For example, a researcher may test two marketing messages with a target market to determine which one makes the most sales.

Psychographics: What I frequently refer to as psychographic characteristics refer to personality variables that often relate to demographics of subjects.

Relate: I use this term to indicate that two variables are associated in some way. This does not indicate a cause-and-effect relationship, when one variable causes a change in another. Neither does it indicate a correlation relationship between variables, negatively (as one increases the other decreases) or positively (as one increases or decreases so does the other).

Reciprocal relationships: The best marketing relationships are reciprocal or mutually beneficial. Both the marketer and the target market members benefit. For example, you need to market better, I’m trying to build a business. If you buy my e-book or other information products on marketing, you learn to improve your marketing while I build my business sales. We both benefit.

Secondary research: This is research that reviews, synthesizes, and sometimes evaluates other research that has been conducted usually by other researchers to gather information related to a specific question or hypothesis. Most market segmentation research is built upon secondary research.

Sociographics: What I frequently refer to as sociographic characteristics refer to sociological variables that often relate to demographics of subjects.

Subjects: In research terms, subjects are what a test manipulates. In market segmentation, subjects are people who buy and are, thus, in a market.

Target Market: The people most likely to buy what you sell (potential customers), identified by demographics, psychographics, sociographics and behavioral characteristics so they can be separated or fragmented from the market as a whole, and marketed to according to their characteristics.

Variable: A variable is a measurable concept that affects changes in a subject. In the case of market segmentation, subjects are people who buy, and variables are characteristics that cause these people to make different buying decisions and to be receptive to different appeals.

These definitions should help you as you read my blogs and other information about market segmentation. I provide lists with links to web pages on market segmentation at Web Pages Covering Market Segmentation.

You can get my ebook – Know’em, Sell ‘em: Discover The Best Appeals For Your Target Market. Just click the art in the upper left corner.

You can learn more about my matrix market segmentation process and assure that you never miss one of my posts by completing the form below:

Posted 2-25-08:
Definition of
Market Segmentation
And Related Terms

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This entry was posted on Monday, February 25th, 2008 at 3:11 pm and is filed under Market Segmentation, Resources. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.