The breaking down or building up of potential buyers into groups called Market Segments.
Market Segments
- The need for marketing segmentation
- Helps design marketing programs most effective for reaching homogenous groups of buyers
- Improves allocation of marketing resources
The need for marketing segmentation
The marketing concept calls for understanding customer and satisfying there needs better than the competition.
Different customers have different needs, and its rarely possible to satisfy all the customers by treating them alike.
Difference between a mass market and target market
Mass market refers to treatment of the market as a homogeneous group and offering the same marketing mix to all customers.
Target market on the other hand recognizes the diversity of the customers and does not try to please all of them with the same offering.
Requirements of market segments
Indefinable: the differentiating attributes of the segments must be measurable so they can be identified.
Accessible: the segments must be reachable through communication and distribution channels.
Unique needs: to justify separate offerings, the segments must respond differently to different marketing mixes.
Substantial: the segments should be sufficiently large to justify the resources required to target them.
Durable: the segments should be relatively stable to minimize the cost of frequent changes.
Bases for segmentation in consumer markets
Geographic segmentation tries to divide markets into different geographical units:
• Regions
• Size of the area
• Population density
• Climate
• Regions: by continent, country, state or even neighborhood
• Size of the area: segmented according to size of population
• Population density: often classified as urban, suburban, or rural
• Climate: according to weather patterns common to certain geographic regions
Demographic segmentation
consists of dividing the market into groups based on variables such as:
- Age Marketers design, package and promote products differently to meet the wants of different age groups. Good examples include the marketing of toothpaste (contrast the branding of toothpaste for children and adults) and toys (with many age-based segments).
- Gender segmentation is widely used in consumer marketing. The best examples include clothing, hairdressing, magazines and toiletries and cosmetics.
- Income Many companies target affluent consumers with luxury goods and convenience services.Good examples include Coutts bank; Moet & Chandon champagne and Elegant Resorts - an up-market travel company.
- Social class Consumers "perceived" social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services.
- Lifestyle Marketers are increasingly interested in the effect of consumer "lifestyles" on demand. Unfortunately, there are many different lifestyle categorization systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns.
Psychographic segmentation groups customers according to their lifestyle. Activities, interest, and opinions (AIO) surveys are one tool for measuring lifestyle.
• Activities
• Interest
• Opinion
• Values
Behavioralistic segmentation is based on actual customer behavior towards products. Some behavioralistic variable includes:
- Opinions, interests and hobbies this covers a huge area and includes consumers’ political opinions, views on the environment, sporting and recreational activities and arts and cultural issues.
- Degree of loyalty customers who buy one brand either all or most of the time are valuable to firms.
- Occasions this segments on the basis of when a product is purchased or consumed.
- Benefits sought this requires marketers to identify and understand the main benefits consumers look for in a product.
- Usage some markets can be segmented into light, medium and heavy user groups.
