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International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comDemographic Segmentation and Its Effects onCustomer SatisfactionSamer AzizM-Phil. Scholar, Department of Management SciencePreston University, Islamabad, PakistanDr. Zekeriya NasHOD TurkishNUML, Islamabad, PakistanABSTRACTSegmentation by demographic factors is widely used in marketing, despite the fact thatthe correlation of such factors with the needs of customers is sometimes weak.Segmentation by expected benefits and attitudes could enhance ability to address theconflict between individual service and cost-saving standardization. Using clusteranalysis segments were formed based on combinations of customer ratings for differentattitudinal dimensions and benefits of products/services. The clusters generated in thisway were superior in their homogeneity and profile to customer segments gained by onlyreferring to demographic differences.1. INTRODUCTIONA Market segment is a subgroup of people or organizations sharing one or more characteristics that causethem to have similar product needs. The purpose is to increase marketing efficiency by focusingmarketing efforts to a particular group (Green, 1977).Quite recently the concept of market segmentationwas presented by Wendell Smith in 1956 again. This concept is significantly impacting many otherestablished concepts in the field of marketing. For each and every product the result in which all partiesare interested is called Profit. And by introducing differences for comparison leads to profitable situation(Homburg, Schäfer, & Schneider, 2012)Nowadays when there is a lot competition amongst people for their products and where the similaritiesexist, this concept of market segmentation achieves the so called rule “Divide and conquer”. This meansthat you target a specific set of customers for your products differently each set and win their trust andsatisfaction in an accumulating manner (Shaw, 2012).Market segmentation provides us to do extensive research and analysis to study different types ofconsumer behavior with respect to their preferences and then keeping track of the trend so as to fulfilltheir needs and demands thru proper product development that satisfies each type.Segmentation criteriacan be categorized as Geographic, Demographic, Psychographic, Behavioural mostly. In Marketsegmentation process first identify the bases for segmenting the market and then develop profiles ofresulting segments (Jones, Shaw, & McLean, 2009).2013©Academy of Knowledge Process44