Market segmentation can also involve communicating the benefits of your products differently to differing groups of consumers. Demographic factors are the most popular bases for segmenting the consumer group. The four bases for segmenting consumer market are as follows. Customer segmentation is conveniently what it sounds like. Demographic segmentation geographic segmentation psychographic segmentation behavioural segmentation.
Develop strong positions in spealized market segment. One market segment is totally distinct from the other segment. By segmenting markets, the target customer can be reached more often and at lower cost. Market segmentation is a process of dividing consumers into groups, respectively segments within which consumers with the same features have similar needs. The attainment of market segmentation goals has been viewed as a major starting point for achieving organizational success.
Market segmentation is the actual process of identifying segments of the market and the process of dividing a broad customer base into subgroups of consumers consisting of existing and. Region south india, western region, north, east city classi cities, classii cities, metro cities, cities with a population of 0. Six reasons for market segmentation why use market. Target marketing communications businesses need to deliver their marketing message to a relevant customer audience. Market segmentation is a marketing concept which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference. In todays competitive world, market segmentation is a crucial marketing strategy which aim to identify and delineate market segments which would then become targets for the companys marketing plans. There is no single correct way to segment a market. Segmenting industrial product markets introduces additional bases, whilst precluding others. One reason is that consumer needs, wants, and usage rates often vary closely with the demographic variables. Market segmentation can help you to target just the people most likely to become satisfied customers of your company or enthusiastic consumers. For example, if the shoes are made with recycled material, you can tout that as a main benefit to consumers who value environmentally friendly business practices. Market definition, market segmentation and brand positioning. Moreover, demographic factors are easier to measure than most other type of variables.
Segmentation of banking product in nigeria has followed the usual consumer product market partitioning with emphasis on such characteristics as geographic, demographic, psychographic and other sociocultural behaviour. Market segmentation, chapter targeting and positioning. Defining a target consumer base can be performed using a variety of segmentation methods. Here, the segmentation is done on the basis of the geographical location of the customers. Though market segmentation is considered to be a natural process, yet there is always an upper limit on consideration of the number of segments in the market. Former assistant lecturer university of jaffna jaffna sri lanka. Kotler and armstrong define market segmentation as dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behaviour and who might require separate products or marketing mixes armstrong and kotler, 2005. The five basic forms of consumer market segmentation are demographic, geographic, psychographic, benefit, and volume. Phillip kotler posted on december 16, 2011 by stuart atkins leave a reply get a free copy of my chapter on.
The sharper focus that segmentation offers, allows those personal, situational and behavioral factors that characterize customers in a particular segment can be considered. Segmentation, targeting, positioning in financial services markets athens university of economics and business paulina papastathopoulou, ph. Segmenting consumer markets geographic segmentation dividing a market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods. The common bases for segmenting consumer markets include. Market segmentation the process of understanding and characterizing the diversity of demand that individuals bring to the marketplace. If the target market is too broad, there is a strong risk that 1 the key customers are missed and 2 the cost of communicating to customers becomes too high unprofitable. Marketer will identify the customer need and want then only decide if it is practical to develop marketing mix to satisfy those wants. See how you can leverage market segmentation by learning. Bases for segmenting organizationalindustrial markets in. Segmentation, targeting, positioning in financial services. Behavioural variables include benefits sought from the product, and buying patterns such as frequency and volume of purchase. Demographic segmentation is based on age, gender, income level, ethnicity, and family life cycle characteristics. Market segmentation whether consumer or industrial has attracted a considerable attention during last 50 years. Market segmentation bases for segmenting consumer markets geographic demographic age, gender, family size and life cycle, or income psychographic social class, lifestyle, or personality behavioural occasions, benefits sought, user status, usage rate, loyalty nations, states, regions or cities.
Paid because i am a loyal and valued customer loyalty marketing. Selecting the target segments toward which the firm directs its marketing actions. Segmentedbased personas will present your insights team with the strongest data, especially when. Customer segmentation is one such strategy that can help a business capitalize in the age of the customer. Segmentation criteria and approaches principles of marketing. The geographical segmentation is based on the premise that people living in one area have different purchasing or buying habits than those living in other areas of the country. Overview into the dynamics of market segmentation market segmentation involve the breaking down of the total market for a product or service into distinct subgroups or segments, where each may conceivably represent a distinct target market to be reached with a distinctive marketing mix with the aim of meeting the customers needs and wants. Quantify the outdoor consumer market in terms of size and spend identify distinct segments of outdoor consumers in the marketplace the resulting data identifi ed macrolevel insights on the u. Market segmentation is the activity of dividing a broad consumer or business market, normally consisting of existing and potential customers, into subgroups of. The final market segment provided in this list of potential market segments is simply the firmsbrands existing customer base.
On the other hand segmentation is an aspect of marketing management concepts that deal with stp strategies segmentation, targeting and positioning ateboh and briggs,2014. Segmenting consumer marketsbusiness markets, market targeting strategy, the positioning process. If the goal is to develop new product development templates for a restaurant chain, then occasionbased segmentation might be a good solution. American journal of business education june 2011 volume 4. If the goal, however, is to develop the strategic positioning and advertising messages for a new smartphone or a new car. Market segmentation ideas a list of generic segments for. Market segmentation is the process of dividing a target market into smaller, more defined categories. The segmentation process the process by which segmentation takes place consists of three main elements. Consumer behavior in marketing patterns, types, segmentation by valentin radu 10 min read november 26, 2019 consumers are really complex in needs and expectations, but if you segment them accordingly and understand their behavior, you will know how to treat your customers and increase the number of loyal ones.
Three important segmentation variables to segment a consumer market are. The overall aim of this chapter is to study the concepts of the market segmentation followed. If an organization markets its products or services to a consumer or business, it should. Defi ne the four steps in designing a customerdriven market strategy.
Using different types of market segmentation allows you to target customers based on unique characteristics, create more effective marketing campaigns, and find opportunities in your market. Psychographic segmentation includes personality, motives, and lifestyle characteristics. By using any of these segmentation bases, either individually or in combination, an organization can construct market segments for evaluation to help them select appropriate target markets. Segmenting consumer markets from principles of marketing. Major segmentation variables for consumer markets market. Demographic segmentations dividing the market into groups based on demographic variables such as age, sex, family size, family lifecycle, income, occupation, education, religion, race and nationality. The common bases for segmenting consumer markets include all of the following from business 101 at rutgers university, newark. Market segmentation meaning, basis and types of segmentation. Market segmentation introduction to business bc open textbooks.
The management can respond to meet changing market demand. After segmenting the whole market into various segments, next question comes is how many segments to target. This topic discusses segmentation bases for consumer markets, there is a separate topic area relating to business market segmentation basesvariables. If you want to become a pro at market segmentation, download our ebook. Segmenting consumer markets consumer segmentation behavioural psychographic profile benefits sought purchase occasion purchase behaviour usage perception and beliefs source.
Consumer behavior in marketing patterns, types, segmentation. An analysis on the conditions and methods of market segmentation. Learn the four types of market segmentation you can use to reach your target customer and create more effective marketing campaigns. There are lots of bases or variables to segment markets which include consumer markets and industrial markets, such as geographic segmentation, demographic. However businesstobusiness customers have more complicated needs, which can make a needsbased segmentation both difficult and even dangerous. A market segment is a classification of potential private or corporate customers by one or more characteristics, in order to identify groups of customers, which have similar needs and demand similar products or services concerning the recognized qualities of these products, e. The bases for segmentation of consumer markets may be divided into two broad. Markets that would have this sort of consumer segment would include.
Marketing segmentation practices and performance of. The basic approach to segmentation, targeting and positioning does not differ greatly between consumer and organizational markets. Top 4 bases for segmenting consumer market your article library. A market segment is a small unit within a large market comprising of like minded individuals. From a tactical view point, positioning represents the sharp end for marketers. Consideration is also given to the techniques and issues concerning market segmentation within consumer and businesstobusiness markets. Behavioural variables are the fundamental basis of segmentation of consumer markets. The following strategies are mostly followed by the most of the fmcg companies to target the customers.
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