Basics On Market Segmentation Strategy

By Eugenia Dickerson


Market segmentation strategy is one of the emerging trends in business. The process which entails subdivision of the consumer pool into smaller units based on a number of criteria has been found to have numerous advantages. The need for segmentation was realized following numerous challenges that were encountered in meeting the needs of a huge heterogeneous group of clients. Many businesses have turned to segmentation in a bid to improve their returns.

For one to divide the market into the said units, they first need to conduct research. The research will help identify the exact needs of the customers and how best their needs can be addressed. It will also help the business in determining the criteria that can be used in creating the segments. Market research may take days, weeks or months depending on how large the market is.

There are many ways that can be used to collect the required information. Some of the research tools that can be used include email surveys, questionnaires, face-to-face interviews and telephone interviews among others. The information that is targeted includes bio data, geographical location, personal preferences and so on. Customers that give similar responses are put into the same groups so that their needs can be addressed in the same way.

There are a number of criteria that are used in creation of segments. Most commonly used criteria include the age, the gender and the preferences of various groups of customers. All these factors are important determinants of demand and supply of goods. Older customers are more conservative compared to the younger generation and the business needs to be aware of this as it provides goods and services.

Gender also has a significant influence on the patterns of demand and supply. Men and women have varied tastes and preferences for different types of goods and services. Women are more likely to conform to changes in fashion while men are not. Also, women have been found to be more regular shoppers compared to their male counterparts. Producers of goods and services need to be aware of these differences.

Seasonality in demand is a form of behaviour segmentation that is fairly common and affects a variety of goods and services. The demand for certain goods increases during certain seasons and decreases thereafter. If the producer has this information, then they will make sure that the goods in question are produced at the required time and adjust downwards later to avoid unnecessary losses.

Behavioural subdivision also includes the use of different levels of product loyalty. Through research, the business should seek to identify the customers that are loyal to the products and those that are not. The loyal customers should be rewarded so as to encourage them to continue using the products and those that are not should be encouraged to be more loyal. Factors that can be used to enhanced loyalty should be identified.

Market segmentation strategy ensures that both the producer and the consumer are happy. This happens because the specific demands of consumers are identified and dealt with and when the consumers feel that their demands are well addressed, they are ready to spend and the business gets good returns. This is very different from the traditional approach where customers were placed into a single heterogeneous group.




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