Market segmentation is the first step in making a customer-driven marketing strategy. It is the initial stage of developing a marketing logic by which the firm can develop customer value and build lucrative customer relationships.

You are watching: Dividing a market into several sections of customers is known as


*

Market Segmentation, Targeting, Positioning and also Differentiation – important for an incorporated Marketing Strategy.


Why do we need industry Segmentation?

Any agency should recognize that that cannot offer all consumers in the full market – at the very least not profitably and also in the very same way. The variety of different kinds the consumers and their demands is merely too large. There space too many differing varieties of customers, characteristics, needs, wants, and also behaviours. Also, many companies have the right to serve part segments much better than others, since there is a better fit between the this firm strengths and also the segments’ opportunities. Thus, every firm should not shot to emphasis on the complete market. Instead, it must divide it up into small segments, i m sorry is called market segmentation. Then, that is better able to reach these industries efficiently and also effectively with products and also services that meet their unique needs. This is the an initial step of setup up a marketing strategy.

The market have the right to be seen as a substantial pie. However the firm has only one mouth. So, that should select the part of the pie which shows up most delicious for the company. In other words, the marketer must recognize which of every the segments sell the ideal opportunities. We can define market segmentation as the procedure of separating a sector into distinctive groups the customers who have different characteristics, needs and also behaviours and therefore require different commodities or marketing programmes. Consequently, we have the right to look at a market segment as a group of consumers responding in a similar way to a set of marketing efforts.


*

Market segment – separating the Market


Market segmentation Variables

In stimulate to division the market into groups of customers, we have to group consumers, based upon various variables which are appropriate to the company. These variables deserve to be based on geographic, demographic, psychographic and behavioural factors. Yet not every market segmentation change is equally beneficial for every company. Because that instance, a automobile manufacturer would gain tiny by distinguishing in between vegetarians and non-vegetarians. However, because that a meat company, this may be the most vital variable in the marketing strategy.

Below you have the right to find summary of the major variables that deserve to be provided in market segmentation.


*

Market segmentation Variables


Geographic market Segmentation

The very first variable that have the right to be used for sector segmentation is of geographic nature. Therefore, geographic market segment divides the sector into geographical units, which can be nations, states, regions, urban or even neighbourhoods. Have actually you ever before wondered why billboards close to colleges advertise much more often pizza and beer, if in residential locations they show cooking ingredients, new food and baby products? The answer is geographic market segmentation.

Demographic sector Segmentation

Demographic market segmentation is all around people. It divides the industry into segments based on variables that tell us something about the population: age, gender, family size etc. Worthy of keep in mind is the reality that demographic sector segmentation variables room the most renowned bases for customer market segmentation. The factor is that consumer needs and wants are frequently interrelated with demographic variables. You can clearly see that power drink is greatly bought by young come middle-aged people. So, this need varies straight with the demography variable age. An additional reason is that demographic variables are fairly easy to measure up in comparison to plenty of others.

Psychographic market Segmentation

Another team of variables perfect for industry segmentation is the Psychographic one. Psychographic sector segmentation means dividing the industry into segments based upon variables such together social class, lifestyle and personality. Good examples because that a industry segmentation based upon lifestyle space furniture, clothing and cars. Also, virtually every market deserve to be segmented based on social class. And also a holiday cruise line providing adventure holidays could like come segment the market based on personality, trying to find adventure seekers.

Behavioural sector Segmentation

Behavioural market segmentation may be another good starting point. It divides a industry into segments on communication of customer knowledge, attitudes, uses or responses come a particular product. These aspects might require some explanation.

Occasion segmentation is all around dividing the market according to occasions that relocate a consumer to buy or usage something. What chance will an outcome in one idea come buy a product or use it? most consumers who drink orange juice might do so at breakfast. Others could prefer it as a cooling drink ~ sporting. Thus, the breakfast or the time after sporting room the occasions according to i beg your pardon we deserve to segment the market.

The market segmentation variable benefits sought should also be defined briefly. It describes the benefits that a consumer seeks indigenous a product. Thus, you deserve to divide the sector into segments based on the different benefits that consumers seek from a product. If us talk about clothing, some consumers can seek style, others function, again rather durability as a benefit. Thus, each segment seeks a various mix that benefits. The company should select the one it can serve and also satisfy best.

Multiple Variable industry Segmentation

Only rarely perform marketers limit the industry segmentation come one or a few variables. Instead, lot of variable sector segmentation is provided to recognize precise, better-defined target groups. And also that becomes clear as soon as you look at an example: your company, a automobile manufacturer, might segment the sector on geographic variables only. Then, friend can construct two models, one because that the Chinese market and one because that the europe market. Yet that would certainly not make any kind of sense there is no considering numerous other factors, such together demographic, psychographic and behavioural ones. Thus, for nearly every product, lot of variable sector segmentation have to be applied.

Requirements for efficient Market Segmentation

As we have learnt, over there are numerous different means to segment the customer market. However, market segmentation must constantly be effective. Clearly, no all segmentations are equally effective. To offer an example: buyers of table salt might be segmented based upon hair colour. However being blond or brunette does, obviously, not influence the purchase of salt. Therefore, we deserve to find certain requirements that should be fulfilled for an effective market segmentation.

Market segments need to be:

Measurable: population size, purchase power and also nationality deserve to be measured. Part segments may be daunting to measure, due to lack of data. Then, there is constantly a risk associated in targeting these segments.Accessible: The industry segments have to be successfully reachable.Substantial: The sector segments must be big and profitable enough come serve.Differentiable: The sector segments must be distinguishable and also respond differently to facets of the marketing mix and programme.Actionable: Is the even possible to offer that segment? This requirement is just fulfilled if reliable marketing programmes deserve to be designed for the industry segment.

See more: Faq: Who Led Athens During Its Golden Age Of Athens Flashcards

 

As we have actually seen, over there are plenty of different opportunities and possibilities to divide a market. By separating the industry into little segments, us are better able to with the ideal consumers efficiently and also effectively through products and services that accomplish their distinct needs after ~ having discovered the details segments, we deserve to go on to the following step, to uncover out i m sorry of this we room going to serve: sector Targeting.