This thesis is aimed to present the role and importance of management in cultural institutions, paying special attention to market segmentation. Management involves guidance and leadership, and its most important branch within an organization is strategic management. The main goal of strategic management is choosing the right strategy for a particular institution or organization, as well as its implementation. As is the case with any other organization, management is essential in cultural institutions. Management in cultural sector refers to connecting theory and practice in the direction of creating, promoting and consuming cultural products. This thesis will enumerate and explain both general and specific functions of cultural management. Moreover, it will describe work organization as the most important function of management. Another important function of management is leadership, which varies between different cultural institutions. However, the first step is a good market research. There are three methods of market research: exploratory, descriptive and causal. The combination of all three methods adds up to the best market estimation. Having conducted market research, we can do market segmentation following certain variables, which are discussed in this thesis. After we have determined a target market, we observe consumers' behavior in order to predict a product's success on the market. Both market segmentation and consumers' behavior have a great impact on the work of institutions, which will be shown in the final chapters of this thesis. Furthermore, all actions in the realm of the cultural sector have to have a financial source; this can refer to one's own income or to financial support on the part of a donor, sponsor, etc. There are cultural institutions that don't aim at a financial profit. Those are called non-profit organizations. Their main goal is to satisfy consumers' need for culture.