Market Segmentation

by Srinivas D on Sunday 17 October 2010, 12:33 PM | Category: Marketing| View: 1194 views
 
 
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Market Segmentation
There are many different kinds of people, and they display about as many different buying patterns. A market segmentation of people or organisations sharing one or more characteristics that cause them to have similar product and/or service needs. 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.
Market segmenting is the process that a company divides the market into distinct of groups who have distinct needs, wants, behaviour or who might want different products and services. Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private sector. Small segments are often termed niche markets or specialty markets. However, all segments fall into either consumer or industrial markets.
Variables Used for Segmentation
Customers or markets can be segmented on the basis of geographic, demographic, psychographic, behavioural or technographic variables.
Geographic variables
  • Region of the world or country, East, West, South, North, Central, coastal, hilly, etc.
  • Country size/country size : Metropolitan Cities, small cities, towns.
  • Density of Area Urban, Semi-urban, Rural.
  • Climate Hot, Cold, Humid, Rainy.
Demographic variables
  • Age
  • Gender Male and Female
  • Family size
  • Family life cycle
  • Education Primary, High School, Secondary, College, Universities.
  • Income
  • Occupation
  • Socioeconomic status
  • Religion
  • Nationality/race (ethnic marketing)
  • Language
Psychographic variables
  • Personality
  • Life style
  • Value
  • Attitude
Behavioral variables
  • Benefit sought
  • Product usage rate
  • Brand loyalty
  • Product end use
  • Readiness-to-buy stage
  • Decision making unit
  • Profitability
  • Income status
Technographic variables
  • Motivations
  • Usage patterns
  • Attitudes about technology
  • Fundamental values
  • Lifestyle perspective
When numerous variables are combined to create a clear picture of a typical member of a segment, this is referred to as a buyer profile. When the profile is limited to demographic variables it is called a demographic profile.
Benefits of segmentation
Segmenting your customers into groups according to their needs has a number of advantages. It can help you to:
  • Identify your most and least profitable customers
  • Focus your marketing on the customers who will be most likely to buy your products or services
  • Avoid the markets which will not be profitable for you
  • Build loyal relationships with customers by developing and offering them the products and services they want
  • Improve customer service
  • Get ahead of the competition in specific parts of the market
  • Use your resources wisely
  • Identify new products
  • Improve products to meet customer needs
  • Increase profit potential by keeping costs down, and in some areas enabling you to charge a higher price for your products and services
  • Group your customers by factors such as geographical location, size and type of organisation, type and lifestyle of consumers, attitudes and behaviour
Next week watch out for what each of these terminologies mean and how are they relevant to marketing!
 
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