Marketing is an organizational function and a set of process to creating, communicating, and delivering value to customers and for managing customer relationship in ways that benefit the organization and its stakeholder. To delivery its value, the company needs a marketing plan and strategy. The objectives of a marketing strategy are to identify a target market and develop a marketing mix that will appeal to those potential customers. Decisions regarding the ideal marketing mix can be organized in terms of Price, Promotion, Product, and Price. However, the objectives are not to just come up with a particular strategy, but rather to focus on providing value to your key market segments. A company needs to identify which market segments it can serve effectively. This decision requires a keen understanding of consumer behavior and careful strategic thinking. Identifying and satisfying the right market segments is the key to marketing success.
A market segment consists of a group of customers who share a similar set of needs and wants. Market segmentation is important not only for creating consumers but also for satisfying them. Market segmentation helps matching of market opportunities to the resources of the company and enables them to face market competition effectively. It raises marketing efficiency through proper adjustment of marketing mix for each market segment. Market segmentation is one important element of marketing management where the company can decide which one(s) to target. Two bases for segmenting customer markets are consumer characteristics and consumer responses. The major segmentation variables for consumer markets are geographic, demographic, psychographic, and behavioral such as consumer responses to benefits, usage occasions, or brands. Marketers use them singly or in combination.
* Geographic Segmentation
Marketers will examine marketing programs to fit the needs of individual geographic areas, localizing the products, advertising, and sales effort to geographic differences in needs and wants. Geographic segmentation can be a very important process, especially for multinational businesses with global brands. They have to formulate different marketing programs, which are intended to attract the customers of different geographic units, which have been formed after careful study and evaluation. For example, Salomon Groups who produces products for various sports for skiing and snowboarding. This geographic segmentation of the market results in the sale of ski boots or snowboard in a country with cold weather (4 season country), but at the same time may promote other types of products in some other country. But it’s hard for Salomon Groups if they try to sell the products to countries with tropical climates (2 season country). (Exhibit 1)
* Demographic Segmentation (Exhibit 2)
* Psychographic Segmentation
Psychographics is the science of using psychology and demographic to better understand consumers. In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values. People within the same demographic group can exhibit very different psychographic profiles. One of the most popular commercially available classification systems based on psychographic measurements is Strategic Business Insight’s (SBI). It consists of the 4 groups with higher resources (Innovators, thinkers, achievers, and experiencers) and 4 groups with lower resources (Believers, strivers, makers, and survivors).
* Behavioral Segmentation
In behavioral segmentation, marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. We can depict one possible way to break down a target market by various behavioral segmentation bases.
Once the firm has segmented the market, it should select the target market segment(s)...