MARKET SEGMENTATION

Market Segmentation



Market Segmentation

Introduction

The total market, heterogeneous, consumer product, is divided into various segments, each of which tends to be uniform in all respects. The management selects one to love such as the target market segments; and each segment is developing a separate marketing mix which means determining demand multiple calendars, one for each market segment. Usually, different customer groups have differing needs and expect different things from their products demand is heterogeneous Market segmentation is the process of breaking down the total market for a product into distinct subgroups or segments where each segment conceivably represents a separate target market to be reached with a distinctive marketing mix. Markets are rarely simple they consist of a variety of buyers with disparate motives and backgrounds, different needs and wants. Additionally, markets are affected by disparate macro-environment factors. Segmentation and the subsequent strategies of targeting and positioning (STP), start by recognizing that within the total market for a product, tastes, needs, and demands may differ, allowing a variety of product solutions to succeed.

Segmentation breaks the total market for a product into individual clusters of customers, or segments, in which those who share alike demand preferences are grouped together within each segment. STP is used to accomplish the following: 1.Segment: determine which kinds of customers exist

2.Target: select which customers a product is best able to serve

3.Position: implement segmentation by optimizing products/services for that segment and communicating the choice to distinguish the company that way

Definition of market segmentation

Segmentation can be summarized as dividing a market by a set of predetermined criteria. Doing so overlooks the key fundamental of what segmentation should be used for—to gain customer insight. Truly understanding the needs of potential and actual customers in a market allows a company to segment along the lines of needs needs it can serve, needs it cannot, needs it wants to serve. The concept is to segment only using variables that having meaning in the context of the company and market it is operating in, not to just jump feet-first and use the usual approach. It cannot be stressed too much that proper segmentation is the fundamental bedrock of any marketing strategy, and if it is poorly conceived or executed, the strategy is a house of cards waiting to collapse. It is harder in practice because there may be a large number of variables that can be used to differentiate consumers of a given product category; yet, in practice, it becomes very cumbersome to work with more than a few variables at a time (Abratt, 2008, Pp79-84).

Significance of Market Segmentation

The behavior of consumers is often too complex to explain in one or two characteristics that should be taken into account. There are several dimensions starting from the needs of consumers that are to be explored by the organizations. A suitable segmentation should result in construction of different subgroups or market segments with the following characteristics:

Intrinsically homogeneous (similar) consumer segment would be favorable for the organization based on consumer's likely responses to the ...