Definition
Market segmentation is known to be an important business growth strategy. It is defined as the division of market into smaller and specific groups that are homogenous but different from other groups.
Levels of Market Segmentation
There are three levels of market segmentation i.e.
- Mass Markets: When the demand of the customers is alike then a company can access a homogeneous approach to target the market as a whole to entertain with a single product or service. But considering the customized needs of customers these days, very few products are being offered like this.
- Segment Markets: This is a segment of the market that has distinguished demands differing in their perceptions, needs and behaviors from other groups.
- Niche Markets: These are the sub groups within the segments. Niches can be defined as segments that are identified on the basis of a divining a segment in to sub segments.
Benefits of Market Segmentation
Most prominent features of market segmentation are as follows:
- Trends in the changing environment are identified in no time
- Products and brands are designed in order to meet the unmet and true demands of the customers
- By selecting the niche, firm faces lesser competitors
- Selection of the distribution channels becomes easily accessible
Segmentation strategies
Markets can be segmented in different types. Keeping in view the given product or service, marketer decides that which strategy will complement the product or service in the best manner. While segmenting, the marketer answers where, who, why, how; questions. Let us see how markets are segmented:
Geographic segmentation (Where):
It is the division of market based upon the geographical units like countries, counties, regions or even neighborhood. In this way the marketer gets quick information about the consumers in an enclosed area. Its benefits are as follows:
- Quick general idea of similarities and differences between the customers according to the geographical units
- Identification of cultural differences
- Climatic differences
- Language differences
Demographic Segmentation (Who)
This will divide the consumers in to groups based upon their age, social class, gender, income, race and religion etc.
Psychographic Segmentation (Why)
Psych-demographic market segmentation strategy describes the reasons behind the purchasing behavior of the customers. This segmentation divides the groups depending upon the life styles of people, their personalities and values etc.
Segmentation of the consumers on the basis of their life styles relies on the notion that life style of a person impacts the interests in products and services directly.
Behavioral Segmentation (How):
Behavioral market segmentation strategy answers that how the behavior of the customers becomes prevalent in the positioning and designing of the products. Also it has become one of the most powerful tools to build as well as expand the markets. This segmentation divides the market depending upon their usages. Six techniques that facilitate in dividing the market under this banner include the following: occasions, benefits south, user status, usage rate, user readiness and attitude towards the products or services.
Market segmentation strategy is a continuous process nowadays as needs and demands of the customers keep on changing. Therefore we just cannot do it once and use it for several years. It needs to be refreshed.
