Business Segment Service

What is a Business Segment?

A Business Segment is a self-sustainable sub-division of the mother company that has a separate product line or service, separate workforce, and separate management. Not all units of a business are considered segments. If a unit cannot be run independently though it generates its own revenue and has its own activities (which are different from that of the main company), it remains as a unit and not a segment. In other words, when an existing company forms separate and independent companies or businesses to produce products or services apart from its primary line of focus, then those separate entities are called Business Segments of the mother company based on having following attributes:

  • Operate independently with different workforce and under different management than that of the main company;
  • Produce products or services (separate from the products or services of the mother company);
  • Remain financially self-reliance i.e. generate their own revenues as well as incur their own expenses;
  • Publish separate reports (yearly or half-yearly) on their financial information and activities.

Real-World Example

A company may segment/ divide its business by region in the same way that Apple Inc. does. Apple Inc. is widely known for making phones, tablets, computers, music players, and many more. Each of these areas can be considered as part of it. This helps Apple executives to decide which area enjoys the most success, and which areas show the lazy sales figures. The company can streamline its marketing and research and development efforts accordingly in an effort to promote corporate profits as a whole.

Four common types of market segregation

Some of the most widely used methods a business can use to differentiate their market include:


Geographical segmentation divides your target market into different parts of the world e.g. neighbors, villages, towns, or countries. It is widely used by multinational corporations that may need to change the way they market their products and services in accordance with the local customs and requirements of each segment. Such factors that will be considered for zoning are lifestyle, climate, and common languages.


Demographic segmentation allows businesses to classify their target market into specific groups based on demographic variations such as gender, age, family size, and life cycle category. Age is the most common form of segregation, especially as consumer needs change with age.

Gender segregation is also popular. It gives businesses the opportunity to hone their products and services in areas where there may be a greater need for men or women.

Many businesses will also divide their market into consumer groups based on their life cycle category. Whether a person is young and unmarried, newly married, married with children, or retired, by separating targeted clients by the stage of their life cycle you can take into account their needs and desires among the most important stages of life.

Many businesses will also consider dividing their markets based on the assumption that the type of residence and place of residence is a reasonable indication of a person’s behavior as a consumer. In some industries, segregation and living space give businesses a reliable idea of ​​the types of products and products they like.


Consumer behavior is another important part of market segregation. There are a few factors a consumer considers before buying. There are four main types of behavioral divisions:

Occasional shopping is one of the most obvious forms of moral separation namely Christmas, Easter, birthdays, celebrations, and more.

Purchase benefits – Many products and services are targeted at consumers who seek specific benefits. For example, some hair shampoos are aimed at those with anti-dandruff needs while others are designed and marketed to those who are concerned about separation.

Consumer loyalty – and the acquisition of new customers, growing businesses also need to retain existing customers. Customer loyalty is another important behavior that market researchers are directed to in order to find the best way to deliver the highest levels of service that they eventually return.

Consumer spending rates – whether B2C or B2B, heavy, medium, or low consumption rates are very important for businesses. Any product that is usually not targeted at a large market will have some form of behavioral segregation. By using this information, niche products and services can be marketed according to the needs and requirements of the targeted customers.


Psychological market segregation is another way of declining demographics that enables businesses to understand potential customer practices, interests, spending habits, and core values.

  • Common examples of psychological knowledge include:
  • Someone who is concerned about their appearance
  • A person who often chooses quality over value
  • A work-focused or family-oriented person
  • Someone who loves the community or prefers a small, intimate group of friends
  • Someone who is usually a product advocate

The most common way to get psychographic information is to negotiate with existing and previous clients. Personal conversations allow you to understand how your customers think, feel and communicate. Individual interviews can provide incredible information, but those looking for a larger sample size may consider submitting a customer survey, asking them to help you better understand their needs.

It is also possible to create a mental impression of how your customers interact with your website. Website statistical tools allow businesses to understand the call to action and the types of content that motivate people to shop.

The bulk marketing approach will work, in every way, to other products with the same purpose for everyone. But market segregation enables a business to target different groups of customers by adjusting their resources and marketing pledges to fit each segment better, leading to much-needed product representation and long-term growth.

Top 10 Benefits of Market Segmentation:

1. Determining market opportunities:

Market segregation enables you to identify market opportunities. An advertiser can study the needs of each component in light of current contributions by competitors. From such research, the seller can obtain the current satisfaction of the customer. For example, customers may not be satisfied with the current supply of water purifiers in terms of a product or after-sales service. Such a situation allows the seller to introduce a new range of water purifiers and market them well.

2. Optimization of marketing complaints:

Retailers can make the best changes to their product and marketing complaints. Instead of a single marketing plan aimed at attracting all potential buyers, marketers can create different marketing programs designed to meet the needs of different customers. Appropriate advertising and marketing complaints can be made depending on the target audience.

3. Improving marketing plans:

Companies can develop marketing plans and budgets based on a clear vision of the response characteristics of specific market segments. They can budget for different segments depending on their purchase response.

4. Product Design:

Market segregation helps design products that really fit the needs of the target audience. Strong products in the high market can be designed and targeted to meet the target market satisfaction.

5. Media selection:

It helps in the selection of advertising media with great ingenuity and in allocating funds to various media outlets. Funds are allocated to various media depending on the target audience, media impact, competitors’ advertising, and more.

6. Marketing time:

It helps to set the timing of promotional efforts to emphasize those times when the response may be too high. For example, the commodity is often heavily advertised to Christians during the Christmas season and Hindus during the Diwali season.

7. Efficient use of resources:

By adapting the marketing plan to the specific market segments, managers can do a better marketing job and use the marketing resources more effectively. For example, a small company can effectively use its limited resources – money, sales capacity, etc. – in one or two different markets rather than aimlessly at a wider market.

8. Better customer service:

Market segregation enables a company to focus its marketing efforts on a particular market area, thus providing better service to targeted customers. Proper segregation of marketing can facilitate customer satisfaction.

9. It helps to fix prices:

The marketing component also allows you to adjust the prices of goods and services. Since different market segments have different pricing ideas, it is necessary to adopt different pricing strategies in the market. For example, prices for low-income groups should be lower and product and promotional efforts should be adjusted accordingly.

10. Help with distribution strategies:

Separation is also helpful in adopting appropriate distribution strategies. Different market segments may require different distribution mixes. For example, if a product is of the highest quality intended to target the highest category, it should be distributed to reputable locations located in selected areas.

Challenges of Market Segmentation

Despite all the benefits of market segregation, businesses still find it difficult to implement the best market segregation processes. This raises concerns about the advanced market segregation processes by 2021. It is very important to understand the benefits of market segregation and its limitations in order to overcome its challenges successfully.

1. Limited access to marketing information:

When it comes to implementing effective marketing segregation processes, businesses generally have limited access to the information needed to develop and implement market segregation.

2. Distinctiveness:

Creating a segment to target is not an easy task since everyone is different; therefore, differentiating people based on their purchasing behavior is also difficult. Market segregation can be considered on an individual basis within the segment and may leave others out. With so many options to consider, it is sometimes difficult to classify customers into categories.

3. Keep market segments up to date:

This is another challenge to divide the markets. As the segments evolve continuously, these should be updated regularly. Important calendar dates may also affect the segments. Therefore, keeping them up-to-date can be very challenging

The Bottom Line

Business segments are the individual businesses within a company that make their own revenues through their distinct products and/or services. The profit of these components can compensate for the losses of others, and give the company a competitive advantage over its competitors.  Market segmentation is important and its benefits are unavoidable. However, at the same time, you need the right resources and expertise to acquire all the advantages of market segmentation. Make sure to have a look at the market segmentation benefits and limitations to get to know more about the related issues.

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