Explain the term Income segmentation?
Market segmentation is an approach that leads to a unified population that is similar in some respects. The target market segment fluctuates in accordance with the consumer market or business market.
Income segmentation happens when customers are sorted according to the yearly or monthly salary they earn. This is a way to create a group of people with similar annual or monthly income. It is best suited for very specific, decent, and high priced products. It helps companies understand the correlation between a customer's income, the price a company offers, and the number of clients a company will have. Since luxury products are highly-priced, it makes no sense to target all consumers. Therefore, luxury items are offered to people with income above a certain level. By categorizing customers into income groups, it is possible to increase the need for better assessment and provide better service.
Step by step
Solved in 3 steps
