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.