Examine the Process of Market Segmentation
Mariam Peyton is a professional Financial Analyst. She holds a Masters degree in Economics. She specialises in financial analysis and forecasting. Her expertise includes studying the financial performance of companies, markets and entire industries looking for trends, insights and information that can help you glean rich insights for use in academic and market research.
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When operating a business, it may not be able to fulfill all the customers’ needs and desires from time to time. It may find some hurdles whilst trying to meet the customers’ exact necessities. This is so because different individuals have different preferences which means that a product manufactured rarely satisfies everyone. To remedy this, companies usually adopt a strategy that is known as target marketing. This involves distinguishing an organization’s entire market into various segments and arranging marketing strategies for each segment so as to increase their market share. This strategy entirely focuses on the customers’ tastes and preferences. It enables businesses to access small groups of individuals and to offer them the best services and products that meet their preferred wants and desires.
This assignment addressed the concept of market segmentation which is one of the stages of target marketing. It answers questions like; what is market segmentation? Why is market segmentation important?
A market segment refers to a group of people that share the same tastes and preferences. The purpose of market segmentation is to identify segments, to select strategies for the segments, and to determine how many segments need to be served. The process of market segmentation is where an organization splits customers in a market into smaller groups so that it can focus entirely on them. Market segmentation is usually based on demographics, which means that the market is divided basing on characteristics such as gender, family size, age, income, occupation, education level, and nationality among others.
The market segmentation is process is made up of a number of steps namely; 1. Defining the market boundary, 2. Segmenting the market, 3. Understanding critically each segment, 4. Creating marketing strategies to cater for the segments, among others which are to be discussed in detail in the following sections of this assignment.
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Examine the Process of Market Segmentation a Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understanding the importance of market segmentation in creating effective marketing campaigns and the different types of market segmentation, such as demographic, geographic, psychographic, and behavioral
- Learn how to identify and profile different segments within a market
- Understand how to select target segments and create marketing strategies that appeal to them
1.0 INTRODUCTION
Market segmentation is the process of dividing a large and heterogeneous market into smaller and more homogeneous groups of consumers who share similar characteristics, needs, preferences, or behaviors.
The purpose of market segmentation is to identify the most profitable segments for a business and to align its products, services, and marketing strategies to meet its specific needs and wants. Market segmentation can be based on various criteria, such as geographic, demographic, psychographic, behavioral, or benefit-based. [Tynan, A.C. and Drayton, J., 1987. Market segmentation. Journal of marketing management, 2(3), pp.301-335.]
Market segmentation is an effective marketing strategy since it entirely focuses on the customers’ tastes and preferences and enables businesses to access small groups of individuals and to offer them the best services and products that meet their preferred wants and desires.
Market segmentation undergoes a number of steps namely;
Identify the market:
This step involves identifying the potential market that is targeted by the company. This market may be defined based on the geographical location of the people i.e. where the people live like a city or a neighborhood, demographic such as age, gender, and nationality among others, and psychographics where people are divided according to their interests, beliefs, and lifestyle views, or behavioral factors where consumers are divided basing on their knowledge, attitude, and use of the product.
Select the bases for segmentation:
The bases for segmentation can be geographic, demographic, psychographic, or behavioral factors. Geographic segmentation is based on the geographic location of the consumers such as a city, neighborhood, and state among others. Demographic segmentation is based on factors such as the age, gender, income, and education of the consumers. Psychographic segmentation is based on the way of life, principles, and character of the consumers. Behavioral segmentation is based on the behavior of the consumers, such as their buying habits, usage rate, and loyalty.
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