Definition of "Market segmentation"

The term market segmentation is mostly used in marketing for assembling prospective buyers in groups based on their needs and their response to a marketing action. One definition of market segmentation is the market’s division into subsets of customers to simplify targeted branding and marketing strategies. When you know who you are trying to attract, you know what they are interested in, it’s easier to approach them.

What is Market Segmentation in Real Estate?

Real estate market segmentation allows real estate companies, investors, and brokers to target specific groups of buyers who would get the biggest benefit from a type of property. The purpose of market segmentation in real estate is to identify and target specific groups of buyers to offer them real estate that was tailored or branded precisely for their needs.

Market segmentation for real estate can be done based on different factors like the type of property (residential or commercial), demographics (millennials or baby boomers), geographical location (one city or state versus another). Based on the type of market segmentation applied and the reason for which it was applied, it can be used in different ways.

Examples of Real Estate Market Segmentation

Real estate agents use market segmentation to find their niche based on the types of buyers or sellers. They can also use it to improve their business depending on the client they work with, the buyer or the seller. Applying market segmentation to their strategy helps them improve their brand and communication towards their targeted audience.

Investors and real estate developers look at market segmentation to evaluate performances. For instance, during economic strife, some segments of the market might be more profitable than others. The commercial real estate market might not be as affected by an economic downturn as the residential market. Similarly, the rental market might drop while the homeowners market skyrockets. In some cities, single-family homes might be more profitable than high-rise apartment complexes or vice versa. Being able to determine this through market segmentation helps investors and developers supply a growing demand while also increasing their revenue.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Term given to two depreciation systems defined by the Internal Revenue Service: The main system is called the General Depreciation System (GDS). Under GDS, most property is assigned to ...

One-story house with a low pitched roof often having an open floor plan. ...

Geographic area that is attractive to prospective tenants. Square footage in an office building or apartment house that may be rented by a tenant. ...

Partnership agreement where the parties consent to purchase the interest of those leaving the partnership while those leaving similarly consent to sell their interests to agreement for a ...

Situation in which an owner of property sells the property to an investor and then leases the property back, usually for a 20- or 30- year term. ...

Land located next to water that has and will continue to experience water damage. The land generally is not suitable to build a structure on. In some cases, federal or local government may ...

Situation in which very few prospective buyers of real estate are rejected by lenders. This may be due to ample money supply, lower interest rates, and/or relaxed credit standards. See also ...

A court order on an issue directly related to the immediate action. ...

Wall having an air space between the two sides. A hollow wall is often covered with wallboard that is nailed to the wall studs providing an air space between the two sides. ...

Popular Real Estate Questions