Market segmentation is a business model used by insurance companies by which they group customers into smaller groups.
The smaller groups of customers will have similar trends and attributes.
For example, if a group of 50 to 60 year old drivers statistically have fewer accidents than a group of 20 to 30 year old drivers, then the insurance company would probably provide a lower rate for that segment of the market.
You can even break the groups into smaller groups.
For example, take that same group of 50 to 60 years old drivers, and then subdivide them into geographical groups.
If 50 to 60 year old drivers that live in large metropolitan areas have more accidents than 50 to 60 year old drivers that live in suburban areas, then the insurance company would probably give lower rates to the group that in suburban neighborhoods.
If you live in a large market like Dallas, Fort Worth, you will probably pay more for your insurance than someone in Flower Mound Texas.
Assuming other attributes for your market are similar.
The next time one of those car insurance rate commercials come on, try and determine what segment of the market they are really trying to go after.
If the actors in the commercial are a retired couple, then it's probably safe to assume they are going after that segment of the market.
If you're a younger driver and you see a commercial featuring a young person on a skateboard listening to rap music, you might want to call that company for a quote because their marketing to your segment of the market.
Not all insurance companies segment their markets the same way, so it makes sense to call around and get several quotes when you are shopping for auto insurance.
Pay attention to not only television ads, but on-line ads as well, as many insurance companies are using the Internet to market their products.
The smaller groups of customers will have similar trends and attributes.
For example, if a group of 50 to 60 year old drivers statistically have fewer accidents than a group of 20 to 30 year old drivers, then the insurance company would probably provide a lower rate for that segment of the market.
You can even break the groups into smaller groups.
For example, take that same group of 50 to 60 years old drivers, and then subdivide them into geographical groups.
If 50 to 60 year old drivers that live in large metropolitan areas have more accidents than 50 to 60 year old drivers that live in suburban areas, then the insurance company would probably give lower rates to the group that in suburban neighborhoods.
If you live in a large market like Dallas, Fort Worth, you will probably pay more for your insurance than someone in Flower Mound Texas.
Assuming other attributes for your market are similar.
The next time one of those car insurance rate commercials come on, try and determine what segment of the market they are really trying to go after.
If the actors in the commercial are a retired couple, then it's probably safe to assume they are going after that segment of the market.
If you're a younger driver and you see a commercial featuring a young person on a skateboard listening to rap music, you might want to call that company for a quote because their marketing to your segment of the market.
Not all insurance companies segment their markets the same way, so it makes sense to call around and get several quotes when you are shopping for auto insurance.
Pay attention to not only television ads, but on-line ads as well, as many insurance companies are using the Internet to market their products.
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