Marketing segmentation explained

Market segmentation is one of the most efficient tools for marketers to cater to their target group. It makes it easier for them to personalize their campaigns, focus on what’s necessary, and to group similar consumers to target a specific audience in a cost-effective manner. Market segmentation is being used by marketers since late 1900’s. Simple though it may be, it is of vital use to forming any marketing plan.

What is Market Segmentation?

Market Segmentation is a process of dividing the market of potential customers into different groups and segments on the basis of certain characteristics. The member of these groups share similar characteristics and usually have one or more than one aspect common among them.
There are many reasons as to why market segmentation is done. One of the major reasons marketers segment market is because they can create custom marketing mix for each segment and cater them accordingly.
The concept of market segmentation was coined by Wendell R. Smith who in his article “Product Differentiation and Market Segmentation as Alternative Marketing Strategies” observed  “many examples of segmentation” in 1956. Present-day market segmentation exists basically to solve one major problem of marketers; more conversions. More conversion is possible through personalized marketing campaigns which require marketers to segment market and draft better product and communication strategies according to needs of the segment.

Basis of Market Segmentation

Segmenting is dividing a group into subgroups according to some set ‘basis’. These bases range from age, gender, etc. to psychographic factors like attitude, interest, values, etc.

Gender

Gender is one of the most simple yet important basis of market segmentation. The interests, needs and wants of males and females differ at many levels. Thus, marketers focus on different marketing and communication strategies for both. This type of segmentation is usually seen in the case of cosmetics, clothing, and jewellery industry, etc.

Age group

Segmenting market according to the age group of the audience is a great strategy for personalized marketing. Most of the products in the market are not universal to be used by all the age groups. Hence, by segmenting the market according to the target age group, marketers create better marketing and communication strategies and get better conversion rates.

Income

Income decides the purchasing power of the target audience. It is also one of the key factors to decide whether to market the product as a need, want or a luxury. Marketers usually segment the market into three different groups considering their income. These are
  • High Income Group
  • Mid Income Group
  • Low Income Group
This division also varies according to the product, its use, and the area the business is operating in.

Place

The place where the target audience lives affects the buying decision the most. A person living on mountains will have less or no demand for ice cream than the person living in a desert.

Occupation

Occupation, just like income, influences the purchase decision of the audience. A need for an entrepreneur might be a luxury for a government sector employee. There are even many products which cater to an audience engaged in a specific occupation.

Usage

Product usage also acts as a segmenting basis. A user can be labelled as heavy, medium or light user of a product. The audience can also be segmented on the basis of their awareness of the product.

Lifestyle

Other than physical factors, marketers also segment the market on the basis of lifestyle. Lifestyle includes subsets like marital status, interests, hobbies, religion, values, and other psychographic factors which affect the decision making of an individual.

Types of Market Segmentation

market segmentation

Geographic Segmentation

Geographic segmentation divides the market on the basis of geography. This type of market segmentation is important for the marketers as people belonging to different regions may have different requirements. For example, water might be scarce in some regions which inflates the demand for bottled water but, at the same time, it might be in abundance in other regions where the demand for the same is very less.
People belonging to different regions may have different reasons to use the same product as well. Geographic segmentation helps marketer draft personalized marketing campaigns for everyone.

Demographic Segmentation

Demographic segmentation divides the market on the basis of demographic variables like age, gender, marital status, family size, income, religion, race, occupation, nationality, etc. This is one of the most common segmentation practice among the marketers. Demographic segmentation is seen almost in every industry like automobiles, beauty products, mobile phones, apparels, etc and is set on a premise that the customers’ buying behaviour is hugely influenced by their demographics.

Behavioral Segmentation

The market is also segmented based on audience’s behaviour, usage, preference, choices and decision making. The segments are usually divided based on their knowledge of the product and usage of the product. It is believed that the knowledge of the product and its use affects the buying decision of an individual. The audience can be segmented into –
  • Those who know about the product,
  • Those who don’t know about the product,
  • Ex-users,
  • Potential users,
  • Current Users,
  • First time users, etc.
People can be labelled as brand loyal, brand-neutral, or competitor loyal. They can also be labelled according to their usage. For example, a sports person may prefer an energy drink as elementary (heavy user) and a not so sporty person may buy it just because he likes the taste (light/medium user).

Psychographic Segmentation

Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and attitude. This segmentation process works on a premise that consumer buying behaviour can be influenced by his personality and lifestyle. Personality is the combination of characteristics that form an individual’s distinctive character and includes habits, traits, attitude, temperament, etc. Lifestyle is how a person lives his life.
Personality and lifestyle influence the buying decision and habits of a person to a great extent. A person having a lavish lifestyle may consider having an air conditioner in every room as a need, whereas a person living in the same city but having a conservative lifestyle may consider it as a luxury.

Nature of a market segment

A market segment needs to be homogeneous. There should be something common among the individuals of the segment that the marketer can capitalise on. Marketers also need to check that different segments have different distinguishing features which make them unique. But segmenting requires more than just similar features. Marketers must also ensure that the individuals of the segment respond in a similar way to the stimulus. That is, the segment must have a similar type of reaction to the marketing activities being pitched.
A good market segment is always externally heterogeneous and internally homogeneous.

Examples of market segmentation

Market segmentation is a common practice among all the industries. It is not possible for a marketer to address the mass with same marketing strategy. Here are some examples of market segmentation to prove this point.
  • Marketers will only waste their time and might end up making fun of themselves if they don’t segment the market while marketing beauty products.
  • A company that sells nutritious food might market the product to the older people while fast-food chains target the working demographic or teens.
  • Sports brands often segment the market based on the sports they play which help them market the sports specific products to the right audience.
Market Segmentation is a convenient method marketers use to cut costs and boost their conversions. It allows them to be specific in their planning and thus provide better results. It ultimately helps them to target the niche user base by making smaller segments.

Comments

Post a Comment

Popular posts from this blog

Work certified and uncertified

Meaning of Work Certified  When contractor takes the contract to complete any construction work, it may complete in 4 or 5 years. but contractor has to pay different expenses for material, labor and others. So, it is very necessary to pay him some money of contract. This money is given on the basis of work done. So, any part of construction which is completed by contractor will be work certified if it is certified by an authority. Authority may be independent engineer or architect who can estimated the work. He will issue the certificate of work done after certifying the work of construction. On this work certified, contractor has right to get money of contract. Meaning of Work Uncertified Work uncertified means work done but not certified by authority. So, contractee will cut some money on the basis of work uncertified and will keep in his pocket. This will be retention money. Accounting Treatment of Work Certified and Work Uncertified  (I) Work  certified and work unce
Read more

Sale of Goods Act- Conditions and Warranties

Image
The Sale of Goods Act, identifies the terms, ‘Conditions’ and ‘Warranties’ as being of a prime significance in a contract of sale. Both the terms imply a promise that is made by the seller. However, the difference between Conditions and Warranties arises due to the nature of the promise that is made in each case. In the case of ‘Condition’ the impact is on the very essence of the contract; whereas, in the case of ‘Warranty’, the promise is in the nature of a collateral to the main purpose of the contract. It is thus evident that if there is a breach of either, a condition or a warranty, the effects will be different. Illustration 1:   Sita bought a wet grinder from an electric shop. The purpose for which the grinder was to be used was known to the seller. The grinder was unfit for the purpose. In this case there is a breach of an express condition by the electric shop and Sita is entitled to return the grinder and be refunded the money paid. Illustration 2:   Varuna bought a
Read more

E Commerce Security environment

THE ECOMMERCE SECURITY ENVIRONMENT What is eCommerce Security? eCommerce security refers to the principles which guide safe electronic transactions, allowing the buying and selling of goods and services through the Internet, but with protocols in place to provide safety for those involved. Successful business online depends on the customers’ trust that a company has eCommerce security basics in place. Privacy One of the most obvious eCommerce security basics is privacy, which in this situation means not sharing information with unauthorized parties. When you shop online, your personal details or account information should not be accessible to anyone except the seller you have chosen to share it with. Any disclosure of that information by the merchant would be a breach of confidentiality. The business is responsible to provide at least the minimum in encryption, virus protection, and a firewall so that bank details and credit card information remain private. Integrity A s
Read more