Market Segmentation - Mba&co

Market segmentation divides a large market into smaller and more manageable sub markets in order to identify homogeneous markets that are

a.Similar in their needs and reactions to a companys marketing activities

b.Considerably different from other such groups in the market.

Groups of individuals with similar needs are combined to create a market segment. . The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts. The people in a given segment are supposed to be similar in terms of criteria by which they are segmented and are different from other segments in terms of these criteria. Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private. Although industrial market segmentation is quite different from consumer market segmentation, both have similar objectives.

An Ideal Market Segment

Ideally a market segment must be measurable; the marketers can estimate their purchasing power and audience size. Segments should be substantial in size and be profitable enough to market to. Segments must be physically or virtually accessible for serving, the marketing effort must reach them directly not through a complicated path of communication. Segments must be differentiable by different needs and reactions to the marketing efforts. They must be actionable; the producer of the product or service must be able to offer them more than 1 product or service. Let us take an example of a niche market product, the market segment is small and measurable and the producer would know the consumer. The marketing message can be sent to them either directly or through an e-mail. Now the needs of their consumers vary, some could use a product for commercial purpose others might for a hobby. The producer must make more products for his/her niche market; this helps them in increasing the reach of their niche.

Market segmentation of a consumer market is very different, there might be many consumer across the country and even the globe. The marketer needs to target the right target segment; this can be done by understanding the following factors:

Geographic base: The region of the country needs to be selected, each area is categorised with a set culture, which reflects on their consumption patterns. Northeast, north, south, south east these areas need to be clearly demarcated. Urban and semi urban markets need to be segmented separately; climatic conditions are also an important factor. At times certain areas do not use certain types of products this needs to be understood before targeting an unnecessary segment.

Demographic base: Age, income, gender and three very important factors. Targeting the right age group is a must, this helps in connecting better with the target market. Income is a very important area, the right income group must be targeted so that they buy the product or service. Gender must be kept in mind while selecting a message, it should appose one from the other. Education, Religion, Nationality and Marital Status are important areas that demarcate demographics.

Psychographic base: Lifestyles need to be understood very carefully; outdoor enthusiasts, cultural oriented groups need to be identified clearly. Personality is another important area, individuals might be introverts, extroverts, social in nature these must be factored in carefully.

Behavioural base: Do the consumers buy products regularly or for special occasions? Do they check or benefits or the price of the product, how much do they know about the product or service. These behavioural factors need to be understood very carefully.

The main reasons for engaging in market segmentation are to help the company understand the needs of the customer base. Identifying a niche is very important and market segmentation makes it easier. Understanding these bases helps in targeting the market specifically. Marketing effectiveness can increase significantly; distinct segments can help in better targeting.

by: Rodney Wincaster

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