Marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them. Market segments allow companies to create product differentiation strategies to target them. Market segmentation is the technique used to enable a business to better target it products at the right customers. It is about identifying the specific needs and wants of customer groups and then using those insights into providing products and services which meet customer needs. Segments are usually measured in terms of sales value or volume. In the diagram below, segment B is twice the size of segment C: A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another. Generally three criteria can be used to identify different market segments. Basis of Market Segmentation
The marketers divide the market into smaller segments based on gender. Both men and women have different interests and preferences, and thus the need for segmentation. Organizations need to have different marketing strategies for men which would obviously not work in case of females. A woman would not purchase a product meant for males and vice a versa. The segmentation of the market as per the gender is important in many industries like cosmetics, footwear, jewellery and apparel industries. Age Group
Division on the basis of age group of the target audience is also one of the ways of market segmentation. The products and marketing strategies for teenagers would obviously be different than kids. Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams
Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines, apparels and so on Income
Marketers divide the consumers into small segments as per their income. Individuals are classified into segments according to their monthly earnings. The three categories are:
High income Group
Mid Income Group
Low Income Group
Stores catering to the higher income group would have different range of products and strategies as compared to stores which target the lower income group. Pantaloons, Carrefour, Shopper’s stop target the high income group as compared to Vishal Retail, Reliance Retail or Big bazaar who cater to the individuals belonging to the lower income segment. Marital Status
Market segmentation can also be as per the marital status of the individuals. Travel agencies would not have similar holiday packages for bachelors and married couples. Occupation
Office goers would have different needs as compared to school / college students. A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals.
Criteria for segmentation
An ideal market segment meets all of the following criteria: •It is possible to be measure.
•It must will be large enough to earn profit.
•It must be stable enough that it does not vanish after some time. •It’s possible to reach potential customers via the organization's promotion and distribution channel. •It is internally homogeneous (potential customers in the same segment prefer the same product qualities). •It is externally heterogeneous, that is, potential customers from different segments have different quality preferences. •It responds consistently to a given market stimulus.
•It can be reached by market intervention in a cost-effective manner. •It is useful in deciding on the marketing mix.
Basis for segmenting consumer markets