Marketing Management - Segmentation


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Market segmentation can be defined as the subdivision of the market into compatible subsections of customers where any subsection may be selected as a market target to be reached with a unique marketing mix.

Segmentation

For example, Hindustan Unilever (HUL) produces a variety of products for different classes such as Surf Excel for higher class, Rin for middle class and Sunlight/Wheel for the lower class.

Objectives of Marketing Segmentation

The main objective of marketing segmentation or the goals to be achieved through marketing segmentation can be understood through the following points −

  • To label potential customers

  • To avail additional privileges for their customers

  • To acknowledge the convenient place to purchase

  • To pay additional benefits willingly

  • To pay proper attention to some precise area

  • To ensure proper database marketing usage

  • To acknowledge real competition in the market

  • To enhance productivity

These are the objectives an organization should keep in mind in order to design the marketing mix and increase its promotion. Let us move forward with the topic and have a look on the importance of market segmentation.

Importance of Segmentation

To achieve the objectives stated above, one has to clearly know the need of market segmentation in the first place. Following are some points outlining the importance of market segmentation.

  • It promotes proper selection of target market.

  • It assists planning and marketing exercises.

  • It aids the tapping of market.

  • Marketing effort is made more effective.

  • It assists in accessing the strength and weakness of the company.

  • It assists in effective usage of marketing resources.

  • It balances proper coordination between the customers and the company.

Based on these points of importance of market segmentation, we will further look at the levels of market segmentation.

Levels of Market Segmentation

The level of marketing segmentation is dependent on the marketing plan of the marketer and the product attributes. There are four different levels of market segmentation.

  • Segment marketing
  • Individual marketing
  • Niche marketing
  • Local marketing

Segment Marketing

In segment marketing, we divide the entire marketing into a bunch of customers with respect to some common characteristics. That common characteristics may be taste, preference, choice etc. Segmenting this market is a very complex process as there are no criteria for the above attributes.

Individual Marketing

In this case, the customers are targeted individually by e-mail, SMS, calls etc. However, in order to make this marketing successful, we have to reduce the degree of heterogeneity.

Niche Marketing

In this type of segmentation, the small markets are targeted taking into consideration customer taste, preference, income and purchasing power.

In this type of market, we have to care for the bargaining power, the discounts, free gift, bonus points, free delivery, lucky coupons and post purchase voucher.

Local Marketing

In this type of segmentation, generally the local markets are targeted.

The organizations try to create patriotism in the mind of the customer by following the slogan “See global, use local”. Again they take help of low-cost advertisements, low transportation costs, frequent delivery, speedy services etc.

Marketing segment are determined depending on the targeted consumer groups for particular products.

Steps in Market Segmentation

Segmentation is the process of creating small portions within a broad market to choose the right target market for various brands. Market segmentation assists the marketers to devise and execute relevant strategies to sponsor their products amongst the target market.

A market segment consists of people who have identical choices, interests and preferences. They generally think on the same lines and are biased towards similar products. Once the enterprise selects on their target market, they can easily codify strategies and plans to make their brands fashionable amongst the consumers.

Let us now discuss the steps in market segmentation −

Identify the Target Market

Identifying the target market means choosing the group of audience who could be a potential customer for the product. By identifying the target group, the marketing strategies can be prepared and products can be shaped.

For example − Different segments of cars are targeted at different consumer groups like the SUV for consumer who likes adventure and prefers outdoor road trips and the Sedan for luxury seeker consumer.

Identify Expectations of Target Audience

Expectations of different audience vary as per their requirement from the product. The demand and requirement of the target consumer changes and the company should keep a track of it and change its strategy as needed. For example, Instant noodles are designed for consumers who don’t have much time to cook.

Create Subgroups

Creation of subgroup specifies the group it is targeted at and consumers from that group can easily relate to the product. This gives the product an edge in market over other products. For example, Face wash has created subgroups such as men and women and advertisements are made accordingly.

Review the Needs of the Target Audience

It’s important to review the needs of the target audience for upgrading the product or shaping the product as per the requirement of the audience. Consumers’ demands change from time to time and the product has to adapt as per the changes in demand.

Name Your Market Segment

Segments should be given an appropriate name so that the products in that segment can be easily identified.

For example − Stores have segments like Boy, Girl, Men, Women, etc., which gives the idea of the products in that segment.

Marketing Strategies

Marketing strategies are meant to promote and advertise the product. They change as per the segment. Advertisements should be for the target audience so that there is a link between the product and the consumer.

Review the Behavior

The review of target consumer gives an insight into the product. Demands vary differently at a particular time of the year and perception of product changes. By taking review of these behaviors, marketing can be planned accordingly.

Size of the Target Market

It’s important to acquire information about the market size and have relevant data for sales planning and forecasting. These steps have to be considered for segmentation of marketing and targeting the product at the potential customers.

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