market segmentation
DESCRIPTION
marketingTRANSCRIPT
MARKET SEGMENTATION
Market segmentation is a marketing strategy that involves dividing a broad
target market into subsets of consumers, businesses, or countries who have
common needs and priorities, and then designing and implementing strategies to
target them. Market segmentation strategies may be used to identify the target
customers, and provide supporting data for positioning to achieve a marketing plan
objective. Businesses may develop product differentiation strategies, or an
undifferentiated approach, involving specific products or product lines depending
on the specific demand and attributes of the target segment.
Market segmentation is the process of identifying key groups or segments
within the general market that share specific characteristics and consumer habits.
Once the market is broken into segments, companies can develop advertising
programs for each segment, focus advertising on one or two segments or niches, or
develop new products to appeal to one or more of the segments. Companies often
favor this method of marketing to the one-size-fits-all mass marketing approach,
because it allows them to target specific groups that might not be reached by mass
marketing programs.
To identify segments, marketers examine consumers' interests, tastes, preferences,
and socioeconomic characteristics in order to determine their patterns of
consumption and how they will respond to various marketing strategies. The
primary information marketers seek is why consumers purchase specific products
or services but not others. Catalog retailers and direct-marketing firms make up
some of the key users of market segmentation, although many other kinds of
companies and organizations use this technique.
Market segmentation—also called micromarketing—simplifies the marketing
process, because it allows marketers to concentrate their advertising on groups of
consumers who share significant characteristics. Marketers, therefore, can produce
specific advertising geared towards specific segments; otherwise marketers have to
create very general advertising and hope that it will appeal to a diverse audience.
Market segmentation also can be more efficient than traditional marketing
techniques such as product differentiation. Because marketers focus their
advertising on specific segments, they can expect better results from each segment
than they could expect from these consumer groups if treated as a whole.
BASIS OF MARKET SEGMENTATION
GENDER
The marketers divide the market into smaller segments based on gender. Both men
and women have different interests and preferences, and thus the need for
segmentation.
Organizations need to have different marketing strategies for men which would
obviously not work in case of females.
A woman would not purchase a product meant for males and vice a versa.
The segmentation of the market as per the gender is important in many industries
like cosmetics, footwear, jewellery and apparel industries.
AGE GROUP
Division on the basis of age group of the target audience is also one of the ways of
market segmentation.
The products and marketing strategies for teenagers would obviously be different
than kids.
Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams
Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags
Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines,
apparels and so on
INCOME
Marketers divide the consumers into small segments as per their income.
Individuals are classified into segments according to their monthly earnings.
The three categories are:
High income Group
Mid Income Group
Low Income Group
Stores catering to the higher income group would have different range of products
and strategies as compared to stores which target the lower income group.
Pantaloon, Carrefour, Shopper’s stop target the high income group as compared to
Vishal Retail, Reliance Retail or Big bazaar who cater to the individuals belonging
to the lower income segment.
MARITAL STATUS
Market segmentation can also be as per the marital status of the individuals. Travel
agencies would not have similar holiday packages for bachelors and married
couples.
OCCUPATION
Office goers would have different needs as compared to school / college students.
A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it
caters specifically to the professionals.
TYPES OF MARKET SEGMENTATION
Psychographic segmentation
The basis of such segmentation is the lifestyle of the individuals. The individual’s
attitude, interest, value help the marketers to classify them into small groups.
Behaviouralistic Segmentation
The loyalties of the customers towards a particular brand help the marketers to
classify them into smaller groups, each group comprising of individuals loyal
towards a particular brand.
Geographic Segmentation
Geographic segmentation refers to the classification of market into various
geographical areas. A marketer can’t have similar strategies for individuals living
at different places.
Nestle promotes Nescafe all through the year in cold states of the country as
compared to places which have well defined summer and winter season.
METHODS OF SEGMENTATION
Companies can implement market segmentation in three general ways: through
differentiation, concentration, and atomization. Differentiation refers to marketing
products or services to different market segments based on each segment's
individual needs as well as to developing new products for different segments. For
example, a computer maker could market its products to home users, corporations,
small businesses, and government agencies, thereby differentiating the needs of
each of these four segments and appropriately targeting them.
A company also may opt to target just one segment of the market, employing the
market segmentation method of concentration. After considering various
segmentation bases and conducting research, a company might find that its
competitors are not reaching specific segments and decide to target this segment or
niche exclusively. A computer maker, for instance, could concentrate solely on the
home-user segment of the market and ignore the needs of the other segments. To
do so, the computer maker would have to offer products that meet home-user needs
at prices these consumers could afford. Since concentrated marketing costs less
than differentiated marketing, it may appeal to small businesses in particular.
Atomization involves dividing the market into very small segments, which may
include a single customer in some cases. Although rare, some companies offering
expensive and highly customized products or services rely on this method. If a
computer maker focused on government clients, it might have to build special
computers for various government branches based on their individual needs. Some
marketing analysts predict that atomization will grow in the coming millennium as
companies strive to offer more individualized service.
When choosing a method of market segmentation, marketers must take several
factors into consideration. First, they must select a method consistent with
company resources, because differentiated marketing, for example, has a
significant cost and some companies may not be able to afford it. Second,
marketers must consider the product line they are trying to sell. If the product line
is limited, marketers usually choose the concentrated marketing method. If the
product line is expansive, however, then marketers usually opt for the
differentiated marketing method.
After choosing a method of market segmentation, marketers must integrate the
method into an overall marketing strategy. The marketing strategy will try to make
the target product or service appeal to the target segment through an advertising
campaign developed based on segmentation information such as age, gender, or
location. Marketers also consider what a company's strategic position in a market is
—e.g., if it is a computer supplier to home users or businesses—and create a
marketing program that will help a company achieve or maintain this position. If
the segment is properly defined for a specific product or service, then developing
promotional strategies and reaching the target segment should be relatively easy.
The information used to help create the market segments should help marketers
choose among promotional techniques (e.g., direct marketing, advertising,
publicity, and sales promotion), pricing strategies, and distribution strategies. This
information also should help marketers choose among various advertising media.
Companies using market segmentation techniques typically strive to maintain a
relationship with their customers, instead just making an isolated sale. After
collecting a large amount of information about their customers, marketers can plan
promotions and products that will appeal to various segments over a long time by
determining what products a segment wants in the future and offering them at the
appropriate time.
STEPS INVOLVED IN MARKETING SEGMENTATING ( DABOUR
TOOTH PASTE):
Select a market or Product category for study:
The first step in market segmentation process entails defining the overall market or
product category to be studied. This gives the marketer bearing and focus
concerning what to do. Such a selection can be done on an existing market or
product category, a new but related market or product category or totally new
market or product category.
Choose a basis for Segmentation:
After a market or product category, a marketer now chooses a basis for
segmentation bases exist as explained earlier. While there are no scientific
procedures for selecting segmentation variables, the four basic criteria for
segmentation must be given adequate consideration.
Select Segmentation descriptors:
Descriptors identify the specific segmentation variables to use. For example
demographic segmentation involves the use of age, occupation, income or any
other as a descriptor.
Profile and Analysis Markets:
The profile of market segments includes the size, expected growth, purchase
frequency, current brand loyalty and overall long term sales and profit potentials.
An analysis of these allows the firm to rank-order potential market segments by
profit opportunity, risk, consistency with organization mission and objectives and
other factors that may be important to the firm.
Select Target Market:
Target market selection follows naturally the segmentation process. It can be
achieved through different strategies, which include differentiated, undifferentiated
and concentrated strategies. A Target market by meaning is a group of people
and/or organization designs, implements, and maintains a marketing mix intended
to meet the needs of that group, resulting in mutually satisfying exchanges.
Design, Implement and Maintain appropriate Marketing Mixes:
After selecting the target market(s), an appropriate marketing mix(es) is(are) then
developed to bring about mutually satisfying exchange relationship with target
markets.
REFERENCES
Haim, Alexander, and Charles D. Schewe. The Portable MBA in Marketing. New
York: John Wiley & Sons, 1992.
Moschis, George P., Lee Euehun, and Anil Mathur. "Targeting the Mature Market:
Opportunities and Challenges." Journal of Consumer Marketing, fall/winter 1997,
282.
Sandhusen, Richard L. Barron's Business Review Series: Marketing. 2nd ed.
Barron's Educational Series, 1993.
http://wealthmeans.blogspot.com/2013/07/steps-in-segmenting
market.html#sthash.AE4xwzZU.dpuf
Weinstein, Art. Market Segmentation. Chicago: Probus Publishing, 1987.