Market segmentation is an active process that determines the strategic positioning of competing products in the marketplace.
Market segmentation can be a complicated task, as it requires analyzing a whole host of factors such as product features, price, brand name, and target market. It is an essential part of deciding which marketing strategies to pursue and can have a significant impact on business sales. Yet very few companies are willing to spend the time and resources necessary to perform this analysis correctly. That’s because even the most successful companies fall far short of their marketing goals due to poor market segmentation.
In business marketing, market segmentation isn’t simply the act of breaking down a large consumer base into smaller ones based on various criteria, usually focusing on key traits that distinguish one product from another.
Instead, it is a process of identifying and designing a unique marketing message that effectively addresses the needs of a specific group of customers. For example, it wouldn’t make sense to market to middle-aged men if your product offers senior discounts, because they aren’t going to be the main audience for your product. Market segmentation also includes the process of identifying and understanding customer segments within a market.
While all customers have similar characteristics, their individual behavioral and psychographic attributes vary significantly.
Market segmentation considers the differences between these two sets of characteristics to determine what each set of customers looks like, behaves like, and likes.
This process is referred to as psychographic or geocultural market segmentation. Market segmentation also involves identifying market segments based on their age, gender, occupation, education level, and geographic location. Here are some of the major categories that are typically considered when discussing psychographic market segmentation:
The first step in effective market segmentation involves analyzing what kinds of products a market segment buys most of its products. In general, buyers are more price sensitive than buyers in other markets.
Therefore, products within a given age and gender group are likely to be bought more often by these customers compared to products available to younger customers or by older consumers in other groups. Therefore, advertisers can target their ads to these groups to maximize their reach. Similarly, age-specific marketing strategies such as cross-age marketing are usually more successful for this market segment than cross-age marketing for other groups.
The way customers interact with the brand.
In general, customers who buy online tend to use search engines more frequently and are more likely to purchase online than customers who buy through other channels. Because search engines rank messages more highly among Internet users, an Internet company that places more importance on search engine optimization messaging will find itself in a better position to attract new customers. However, there is a flip side to this strategy as well: if an Internet company places heavy emphasis on search engine optimization messaging, it may not necessarily lead to increased online sales. This is because Internet users who search for a brand online are less likely to convert to buyers.
Similar characteristics between market segments.
For example, customers who are relatively young and relatively inactive may be more apt to use social media platforms than customers who are more mature. It is therefore important for marketers to take a careful look at how they use different marketing strategies to analyze which methods will work for them and which methods may not. They should also be prepared to change their strategies when it becomes ineffective.
Market segmentation includes looking at any four types of customers:
first-time customers, repeat customers, existing customers and ideal customers.
Each type of customer has distinct characteristics, and they each differ in their purchasing behavior. First-time customers are typically characterized by an overall lack of purchasing power, having limited experience buying on the Internet and being uncertain about making purchases online. In contrast, repeat customers are those customers who have previously bought from a company and continue to do so on a regular basis, ideal customers are those customers who strongly agree that they need a particular product or service and have therefore repeatedly purchased from that same company and are therefore considered ideal customers.
Mapping customer characteristics into four categories.
All these four types of customer are important in marketing campaigns as they can then be used effectively to determine the target market and its target products or services. The techniques that are used in market segmentation vary according to what type of businesses one wants to target. However, all these techniques are closely related and depend largely on the traits of customers and their buying habits. These traits have to be analyzed carefully as otherwise, there would be no point in using marketing strategies.