In order for one to successfully analyze the broad but specific topic that Market


Segmentation is, marketing and economics are the two core areas that ought to be


concentrated upon and conceptualized as they touch squarely on the topic. The


accompanying theories with which it comes will help us get a much clearer insight into


what marketing segmentation actually entails.

The theory of interest rates otherwise known as the segmented markets theory


argues that there exists an independence in the way short-term and long-term markets act


and that the maturity preferences of investors are fixed, and that there is a distinction in


the markets of short-term and long-term rates whereby each has its unique buyers and


sellers who are not interchangeable.[1]

The second theory and which I find equally as important to this topic as the first


one is the theory of liquidity preference which sees investors as risk-fearing and as a


result will ask for premium for securities that take long to mature. The premium will


Increase at a decreasing rate as a result of downward pressure from the interest-rates


decrease in volatility while at the same time maturity-term increases. This further


aggravates the fears of the investors.

Market Segmentation would not be studied exhaustively without a look at its


relation with the labor markets theory or the neo-classical economic theory where buyers


and sellers compete openly with one another and where its functions are similar to those


of other markets.[2] Workers would rather idle instead of working and there are differences


in human capital. Different jobs demand different qualifications and attract different pay.

Market Segments are identifiable from other segments due to their division into


parts of organizations and people with some or entirely same characteristics that make


them to ask for products, services and prices that are similar. This division into lots of


organizations and / or people with commonness in their needs forms the consumer group


This consumer group will equally have similarities in their demand for products, prices


and subsequently the function of these products. The above named characteristics thus


make the uniqueness of Market Segmentation from other segments: The division into


groups of consumers.

This segmentation has its positive as well as negative sides for the market in


terms of the different amounts the different consumer groups are charged.[3] The


marginalization of minorities on racial lines, which has its basis on the labor markets


segmentation theory, sees to it that much as the market would like to pay the workforce


different wages for the same job and same qualification, it also should be prepared to put


up with different prices for the same item to these differently paid workers. This is a


classical case of skewed market segments that exist in the market.

Recognizing customer needs is very crucial in the market segment. This ensures


that the seller survives the turbulent waters of the ever changing market trends. The


different segments with different groups of buyers asks for different groups of different


sellers. The basis of this assertion is the theory of interest-rates. The situation in this case


therefore demands that products and services be tailor-made so as to suit the demands of


the customers. For example if a customer prefers short-term interest-rates then the seller


will have to comply and provide exactly what the customers demand from him or else he


will get out of business. This implies that for short-term interest-rates customers, give


short-term interest-rates and for long-term interest-customers, give long-interests.

The fact that labor market segmentation theory does not focus on the individual


but rather groups as an entity while the theory of liquidity preference focuses on the


Individual and his relation and interest rates in the market segmentation is a pointer to


how markets, economic and labor, function is an intricate web with various people with


varying interests but all managing to function together in a mutual relationship


Individuals interact with the structures of institutions in the market segments no


matter what their form of employment is and whichever their gender or race although


there are primary and secondary segments which are of great consideration in the entire


market segmentation set-up. These are basically the key points in the very crucial field of


market segmentation, together with its theories that keep it going and which whose study


makes us get an insight into how they interrelate, how interest-rates dictate the investors’


plans while venturing into the tricky affair that that the investment and job market is.


The segmented market is therefore a highly competitive market and survival


tactics ought to be devised and employed in every step depending on the kind of


customer one is dealing with failure to which the seller will close shop. The


categorization of customers and workers on the basis of race in the segmented market is


very unfair not only to the worker who gets a pay lower than his correctly colored


counterpart, but also to the seller himself. This hurts business besides reducing the market


segments into a man-eat-man society. All the same, Market Segmentation provides an


opportunity to competitive able and willing people to succeed.










Hillmet, (2002). Labor Market Integration and Institutions: An Anglo-German


Comparison; Work Employment Society.


Kuznets, (1955). Economic Growth and Income Inequality; American Economic Review.


Morrison, (1990). Segmentation Theory Applied to Local, Regional and Spatial Labor


Markets; Progress in Human Geography.


[1] Hillmet, (2002). Labor Market Integration and Institutions: An Anglo-German


Comparison; Work Employment Society.


[2] Kuznets, (1955). Economic Growth and Income Inequality; American Economic Review.


[3] Morrison, (1990). Segmentation Theory Applied to Local, Regional and Spatial Labor


Markets; Progress in Human Geography

Written by