Market Segmentation
Market segmentation is a 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.
Criteria for segmenting
An ideal market segment meets all of the following criteria: * It is possible to measure. * It must be large enough to earn profit. * It must be stable enough that it does not vanish after some time. * It is 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.
Methods for segmenting consumer markets
Geographic segmentation
Marketers may segment according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or postal codes. The geo-cluster approach combines demographic data with geographic data to create a more accurate or specific profile.[1] With respect to region, in rainy regions merchants can sell things like raincoats, umbrellas and gumboots. In hot regions, one can sell summer wear. In cold regions, someone can sell warm clothes. A small business commodity store may target only customers from the local neighborhood, while a larger department store can target its marketing towards several neighborhoods in a larger city or area, while ignoring customers in other continents.
Psychographic segmentation
Psychographics involves using sciences like
Market segments allow companies to create product differentiation strategies to target them.
Criteria for segmenting
An ideal market segment meets all of the following criteria: * It is possible to measure. * It must be large enough to earn profit. * It must be stable enough that it does not vanish after some time. * It is 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.
Methods for segmenting consumer markets
Geographic segmentation
Marketers may segment according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or postal codes. The geo-cluster approach combines demographic data with geographic data to create a more accurate or specific profile.[1] With respect to region, in rainy regions merchants can sell things like raincoats, umbrellas and gumboots. In hot regions, one can sell summer wear. In cold regions, someone can sell warm clothes. A small business commodity store may target only customers from the local neighborhood, while a larger department store can target its marketing towards several neighborhoods in a larger city or area, while ignoring customers in other continents.
Psychographic segmentation
Psychographics involves using sciences like