Market Segmentation- Concept And Its Levels

Segmenting Targeting and Positioning Strategy

In today's world marketers do not appeal all the buyers in the marketplace in the same way. As buyers are too numerous as well as wide and scattered all over the globe. For example, Dunkin Donuts must be able to identify their markets and customers and serve the best. Now the company has diverted from mass marketing towards the target marketing by identifying the market segments and marketing tailored to each.

As the figure shows that there are four major steps in designing the customer driven marketing strategy. In the first two steps company will select customers which it will serve. Market Segmentation means dividing the market into smaller groups of buyers with various needs, characteristics, and behaviors that will require separate products or marketing mixes. Market Targeting involves in evaluating each markets segment attractiveness and choose any one or more than one market segments to enter.

In the last two steps, the company will focus on adding value towards the customers. Differentiation means differentiating the firms market offering to create target customer value. Positioning means arranging the market offering to occupy clear, distinctive and desirable place relative to competing products in the vision of target customers.

Market Segmentation

The market consists of buyers who differs in many ways. They may differ according to their needs, wants, desires, location, buying attitudes etc. Market segmentation divides the large markets into smaller market segments that will definitely play significant role with any products or services to match the customer needs. There are four important segmentation topics i.e. segmenting consuming markets, segmenting business markets, segmenting international markets, and requirements for effective segmentation.

Segmenting Consumer Markets

There is not a single method to segment a market so marketers use major variables like Geographic, Demographic, Psychographic, and Behavioral variables.

Geographical Segmentation

Geographical segmentation involves in dividing the market into different geographical units such as nations, states, religions, cities, neighborhood or countries. A company will decide to operate in single or multiple geographical areas. For example, Kraft had made Post’s Fiesta fruity pebbles cereal for areas with high Hispanic populations and Coca-cola has made four ready –to drink canned coffee for the Japanese market.

Demographic Segmentation

Demographic Segmentation is related to the division of the market into a group based on variables such as age, gender, family, life cycle, income, occupation etc.

-Age and Life- Cycle Segmentation

As consumer needs and wants changes with age so the company uses age and life cycle segmentation offering different products for different age groups. For example, Procter and Gambles sell Crest Spin brushes featuring favorite children's character.

-Gender Segmentation

It involves in the division of a market into different groups based on gender. It has long been used in clothing, cosmetics, magazines etc. For example :L’oreal Paris now offers men's expert skin care protection.

-Income Segmentation

If the market is divided into various market groups then it is called Income segmentation. This strategy has been used by the marketers of products, and services such as clothing, automobiles, cosmetics, financial services and travel. For example Dollar general, Family Dollar store chains successfully provide product and services to lower and middle-income groups.

Psychographic Segmentation

It is the process of dividing the markets into different groups on social class, lifestyle, or personality characteristics. Person with the same demography may have different psychographic measures.

Behavioral Segmentation

Behavioral Segmentation divides the buyers into various groups which are based on their knowledge, attitudes, uses, or responses to a product. Many marketers also believe that this variable is the best starting point for building market segments.

For example, Eggs mostly are eaten during breakfast but American Egg Board with its “incredible, edible egg “ theme advertises the eating the eggs at all time of the day.

Levels of marketing segmentation

a) Mass Marketing

Companies do not always practice target marketing. In fact, major consumer products companies held fast to the concept of mass marketing i.e. mass-producing, mass distributing and mass promoting the same product in the same way to all consumers.Similarly, Coca-Cola one time has produced only one drink for the whole market, assuming it would appeal to everyone.

b)Segment Marketing

A company which practices segment marketing isolates broad segments which make up a market and adapts its offers to more closely match the needs of one or more segments. Segment marketing offers several advantages over mass marketing. The company is able to market more efficiently by targeting its products or services, communications, and channels programs toward only consumers which it can serve best and most profitably. The company could also market more effectively by fine-tuning its products, programs, and prices to the needs of carefully defined segments.The company might also face fewer competitors if they are focusing on this market segment.

c)Niche Marketing

Market segments are generally large identifiable groups within a market. For example, performance car buyers, luxury car buyers, economy car buyers, utility car buyers.Niche marketing focuses on subgroups within these market segments.A niche is a more narrowly defined group, normally identified by several by defining a group with a distinctive of behavior who might seek a special combination of benefits. Whereas segments are large and generally attract several competitors,niches are smaller and normally attract only one or a few competitors.Niche marketers understand their niches needs so well that their consumers are willing to pay a price premium.

d)Micro marketing

Segment and niche marketers tailor their marketing programs and offers in order to meet the needs of several market segments.At the same period,however,they don’t customize their offers to each individual customer.Thus, niche marketing and segment marketing fall between the extremes of mass marketing and micromarketing. Micromarketing refers to the practice of adjusting products to suit the tastes of specific individuals and locations. Micro marketing includes local marketing (Local marketing includes tailoring brands and promotions to the needs and wants of local consumer groups-- neighborhoods, cities, and even specific stores).

Reference

http://www.segmentationstudyguide.com/understanding-market-segmentation/market-segmentation/

Kotler, P., & Armstrong, G. (2013). Principles of Marketing. Chennai: Pearson India Education Services Pvt Ltd.