Market segmentation looks at the nature and extent of diversity of buyers" needs and wants in a market. It offers an opportunity for an organization to focus its business capabilities on the requirements of one or more groups of buyers.

The objective of Segmentation is to examine differences in needs and wants to identify the segments within the product-market of interest. Eject segment contains buyers with similar needs and wants for the product category of interest to management. The subgroups are described using the various characteristics of people, the reasons that they buy or use certain products, and their preferences for certain brands of products. Likewise, segments of industrial product-markets may be formed according to the type of industry, the uses for the product, frequency of product purchase, and various other factors. Each segment may vary quite a bit from the average characteristics of the entire product-market.

The similarities of buyers' needs within a segment enable better targeting of the marketing program. Factors such as age, income, lifestyle, and reason for purchase may be useful in segmenting the Caribbean cruise market. For example, cruises arc popular for newlyweds and retired couples, and are used by business firms as incentives for sales people.