West Rail vs. Bus - Lingnan University Library

3.5 Market Segmentation
Market segmentation is the process of identifying a group of people similar
in one or more ways, based on a variety of characteristics and behaviors (Blackwell,
Miniard and Engel, 2001). In other words, people are grouped together based on
similar traits like age and lifestyle. They have some similar consumer behaviors
because of their similar traits.
Market segmentation is important for a company to formulate strategies to
increase profitability. First, it is easier to serve people with similar needs. Second,
market niche can be found to serve those customers whose needs are being ignored. It
can reduce competition by finding more potential customers. Third, marketing
resources can be efficiently used for targeting the most profitable customers (DSS
Research, 2004). Profit can increase by satisfying needs and wants of different groups
in the market.
The priori segmentation is used to segment the West Rail passengers. A priori
segmentation involves dividing a market into segments without the benefit of primary
market research. Manager intuition, analysis of secondary data, analysis of internal
customer databases or other methods are used to group people into various segments.
This report will use priori segmentation method to choose the variables of home
location and age to define the segment.
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