Market segmentation strategy is fairly new concept in business. As the name suggests, it the process of dividing the market in a manner in which specific consumer needs will be addressed. The increase in popularity in this method of advertisement is largely due to the challenges that have been faced with other methods. For instance, mass marketing, which has been with us for many years, aims at reaching out to the whole population and this may not address what each consumer needs.
There are many ways in which the market can be subdivided. These will be largely determined by the nature of market and the type of product that is being sold. Existing commercial laws also have some influence on the type of approach that can be adopted. Once this has been done, the product can be modified to meet the needs of various segments. This is also known as product differentiation.
There are a number of things that you need to have in mind as you segment your consumer pool. Ideal segments have to meet a set of minimum requirements. Each segment must be profitable enough to support the administration costs that are directly attributable to it as well as the costs involved in production of the goods or services. It is also important to ensure that there is homogeneity within the segment.
Stability of a segment is very important. There is no need of creating a segment that will either disappear or reduce suddenly in size. Properly created segments give the marketer time to advertise their products and to start receiving returns. Choosing segments, therefore, calls for careful selection of the criteria to be used.
There are a number of consumer characteristics that used for creation of segments. Geographical location of the targeted consumers is one of the commonest attributes that can be used. It entails the breakdown of the large pool of customers based on their country, city or even state of origin. By creating consumer profiles based on this data, decisions regarding service provision and product production are made.
Behavioral segmentation refers to the creation of consumer groups depending on their degree of knowledge of different products or services. It also takes into account their attitudes towards the various products or services. A significant number of consumers will buy goods or services because of certain prevailing conditions. This is popularly referred to as occasional buying. The producer and marketer need to be aware of the existence of such groups and ensure that they avail the required products at the appropriate times. For instance, they need to provide gifts for Christians during Easter and Christmas.
Psychographic segmentation is another strategy frequently employed. Under this method, the main characteristics that are considered are demographics and consumer psychology as regards the goods and services. This includes characteristics such as lifestyle, social class and consumer personal values among others.
The most important thing to know is that market segmentation strategy may use virtually any form of attribute to create the groups and subgroups. Obvious differences like gender, income and age can be used almost anywhere. When a preexisting variable is used to create the segments, this is known as priori segmentation. When the variables are determined through research, it is known as post-hoc.
There are many ways in which the market can be subdivided. These will be largely determined by the nature of market and the type of product that is being sold. Existing commercial laws also have some influence on the type of approach that can be adopted. Once this has been done, the product can be modified to meet the needs of various segments. This is also known as product differentiation.
There are a number of things that you need to have in mind as you segment your consumer pool. Ideal segments have to meet a set of minimum requirements. Each segment must be profitable enough to support the administration costs that are directly attributable to it as well as the costs involved in production of the goods or services. It is also important to ensure that there is homogeneity within the segment.
Stability of a segment is very important. There is no need of creating a segment that will either disappear or reduce suddenly in size. Properly created segments give the marketer time to advertise their products and to start receiving returns. Choosing segments, therefore, calls for careful selection of the criteria to be used.
There are a number of consumer characteristics that used for creation of segments. Geographical location of the targeted consumers is one of the commonest attributes that can be used. It entails the breakdown of the large pool of customers based on their country, city or even state of origin. By creating consumer profiles based on this data, decisions regarding service provision and product production are made.
Behavioral segmentation refers to the creation of consumer groups depending on their degree of knowledge of different products or services. It also takes into account their attitudes towards the various products or services. A significant number of consumers will buy goods or services because of certain prevailing conditions. This is popularly referred to as occasional buying. The producer and marketer need to be aware of the existence of such groups and ensure that they avail the required products at the appropriate times. For instance, they need to provide gifts for Christians during Easter and Christmas.
Psychographic segmentation is another strategy frequently employed. Under this method, the main characteristics that are considered are demographics and consumer psychology as regards the goods and services. This includes characteristics such as lifestyle, social class and consumer personal values among others.
The most important thing to know is that market segmentation strategy may use virtually any form of attribute to create the groups and subgroups. Obvious differences like gender, income and age can be used almost anywhere. When a preexisting variable is used to create the segments, this is known as priori segmentation. When the variables are determined through research, it is known as post-hoc.
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