INTRODUCTION
Concept of Market Segmentation
In older days, many business firms viewed all their consumer population as a single market with uniform characteristics and requirements. Hence the developed a single brand and a common marketing program to satisfy all their consumer population. However, in the recent years with the increase in the competition this old approach of firms does not yield the desired results. Hence the modern firms subdivide their target market into different groups and subgroups of consumer population on the basis of their identifiable distinct and homogeneous characteristics.
Each of these groups is called a market segment . Further the firms use distinct marketing mix for each of these market segments, in order to increase consumer satisfaction and profits of the business. Thus market segmentation is a recent idea that helps the firms in framing their marketing strategy.
Definitions
Same of the important definitions of market segmentation are given below.
(1) Marketing segmentation is a process of dividing a market into distinct groups of buyers on the basis of needs, characteristics or behaviour who might repaire separate products or marketing mixes”.
Features
On careful analysis of the above definitions, we may obtain the following characteristic features of market segmentation.
(1) Process : Market segmentation is a process of subdividing the target market for firm’s goods and services into subgroups of consumer population.
(2) Segments : Consumers of products of services of a firm differ in their wants, resources, geographical location, buying attitudes, buying practices, etc. Hence, they are divided into homogeneous groups and subgroups having distinct features. Each of these subgroups are called segments. Thus, a marketing segment is a meaningful consumer group having distinct feature and similar want.
(3) Object : The object of doing market segmentation is to enable the business firm to focus properly on the specific consumer needs of each segment and to maximise the consumer satisfaction and profits of business. Market segmentation also helps small business firms to identify the most attractive segments that they can serve effectively instead of running after all varieties of consumers in different segments without giving proper justice to any of them.
(4) Special market mix : By doing market segmentation firms attempt to fulfill the needs of different consumer groups through proper marketing mix consisting of products, price, promotion and distribution.
(5) Use of bases : For segmenting the firm’s market various bases are used, such as region, age, sex income levels, occupation, religion, consumption level, culture, etc. of consumers.
Importance of Market Segmentation
Market segmentation strategy offers several benefits to the organization as well as to the consumers. The important benefits enjoyed by the organization using this strategy are :
Bases for Market Segmentation
Market segmentation involves grouping and subgrouping of consumers on the basis of similar buying characteristics. There are a number of bases on which such segmentation or grouping of consumers can be done. These bases are as under.
Bases of Market Segmentation
(A) Consumer Characteristics (B) Consumer Responses
(1) Geographic (1) Benefits
(2) Demographic & Socio- (2) Usage
Economic
(3) Psychographic (3) Loyalty
(4) Occasion
(A) Consumer Characteristics Approach :
Under this approach, person characteristics of consumers as to where they live, who are they, how they behave, etc. are considered for making segmentation of markets. Following is the brief explanation of these bases.
(1) Geographic Segmentation : Geographic segmentation is the most traditional basis of market segmentation, which is used widely even today. The market is divided into different geographical units as continents, countries, states, districts, regions and areas, etc. As the consumers in different areas have different preferences and tastes for products, marketing managers distinguish carefully among the regions, in which they may operate and select only those where they hae comparative advantage. Sometimes, they may even operate in all those regions paying attention to the geographical needs and preferences of consumers in those regions.
(2) Demographic and Socio-economic Segmentation : Demography means the study of population. Demographic segmentation is based on demographic variables, such as age, sex, marital status, family size, place of residence, etc. Socio-economic segmentation is based on socio-economic characteristics, such as income level, education, occupation, social class, religion and culture, family life cycle, etc. For example, the market for consumer goods in India is segmented into 3 segments - high income group, middle class and lower income group. The middle class is further segmented husband and wife working, young family with only husband working. etc. Such a type of segmentation helps in developing on demographic variables is the most popular for two reasons; firstly consumer wants, preferences and usage rates are highly associated with these variables, and secondly, these variables are easier to measure than most other types of variables.
(3) Psychographic Segmentation : Psychographic is a recent approach to market segmentation. This approach has been designed by Professor E. Denby, who says that psychographic tries to describe the human character of consumers that has influence on their responses to products, packings, advertising and public relations efforts of the firm. Psychographic characteristics include variable like - personality, attitudes, life-style.
Markets are segmented using two or more of the above bases and proper market mix is provided
for target market segments.
Targeting
After the most attractive segments are selected, a company should not directly start targeting all
these segments -- other important factors come into play in defining a target market. Four sub activities form the basis for deciding on which segments will actually be targeted.
The four sub activities within targeting are:
