This material on market segmentation will explain us why segmentation matters and what are the best strategies to do it accurately. We start from a diagram which contains the building blocks for successful marketing. At the top we have what the customers perceive as outputs of the sales and marketing programmes: products, services, the channels that we use, advertising, promotion and customer services. These items reflect how we are assessed on the market and if they are achieved properly we can move on to the next step which is designing a strategic marketing plan, usually on a short term, which contains objectives and strategies to achieve certain values and volumes that we set as target for the identified market segments. The next phase consists in the audit of both internal and external environment and also includes the assessment of strengths and weaknesses of competitors. All these components rely on the market framework which provides a detailed overview of market structure and segmentation. If this framework is unsound then the entire structure becomes very unstable and objectives will be harder to achieve. This tutorial on market segmentation will help us define markets and segments, understand their value and determine which segments we should focus on.