MARKET SEGMENTATION

Market Segmentation



Market Segmentation

Introduction

Market segmentation is the process of identifying your target demographics and then determining the best advertising mediums to reach that audience. Developing a focused marketing approach can increase your revenue and raise your marketing return on investment, according to the Centre for Business Planning website. When you understand the importance of market segmentation, you begin to appreciate the value of precise marketing campaigns.

When segmenting a market, it is often simplest to start with demographics: whether your target customers are male or female, how much money they make, where they live, what they do for business and what their family is like. This is a good start for a lot of products, but you will likely find greater value by digging a bit deeper. Target customers have a set of beliefs and values that drive their purchases. They may be interested in a good deal or find greater value in a product's green ecological impact. It's important to understand these motivations to effectively tailor your marketing efforts.

The Importance of Market Segmentation

Understand Customers

To sell to your customers, you first must understand why they would want to buy your product. Market segmentation allows for the development of profiles of the many different kinds of customer groups who buy your products. You can use this information to create better marketing programs. It also can be used to develop products for your target audience.

Maximize Product Potential

Segmenting your market helps you understand how your product is being used by various customer groups (Dicken, 2008, 633-53). During the course of your market segmentation, you may come across an alternate use for your product that had not been previously discussed. You may discover a new market for your product.

Improve Distribution Network

Market segmentation assists companies in developing more efficient distribution networks. By studying the buying behaviours of various target customer groups, you can determine the way that customers prefer to buy your product (Cooper, and Chew, 2006, 88-97). If customers prefer to buy online, you will want to focus on your online presence and reduce the resources you put into retail stores. Market segmentation also helps you identify geographic areas where your products are popular.

Gain New Clients

A comprehensive market segmentation analysis includes reasons why consumers are not buying your products. By understanding why the various market segments do not buy your products, you can alter your marketing or change your product development to try to gain new customers. It is important to have a balance when trying to gain new clients as you do not want to alienate and lose your existing customer base.

Market Segmentation in Target Marketing

Market segmentation refers to dividing a market into smaller groups, a common practice for most marketing strategies. Marketing teams can segment a market by any factors they want; some of the most common are age, location, and wealth and product usage. Data on people is easy to find and analyze, but it can be more difficult deciding what markets encompass product ...