Market Segmentation Net Exam Preparation Paper – III

                                        Market Segmentation

Market segmentation is a marketing strategy which involves dividing a broad target market into subsets of consumers, businesses, or countries who have, or are perceived to have, common needs, interests, and priorities, and then designing and implementing strategies to target them. Market segmentation strategies are generally used to identify and further define the target customers, and provide supporting data for marketing plan elements such as positioning to achieve certain marketing plan objectives. Businesses may develop product differentiation strategies, or an undifferentiated approach, involving specific products or product lines depending on the specific demand and attributes of the target segment

Types of Market Segmentation

• Psychographic segmentation The basis of such segmentation is the lifestyle of the individuals. The individual’s attitude, interest, value help the marketers to classify them into small groups.
  
• Behaviouralistic Segmentation The loyalties of the customers towards a particular brand help the marketers to classify them into smaller groups, each group comprising of individuals loyal towards a particular brand.
  
• Geographic Segmentation Geographic segmentation refers to the classification of market into various geographical areas. A marketer can’t have similar strategies for individuals living at different places.
  Nestle promotes Nescafe all through the year in cold states of the country as compared to places which have well defined summer and winter season.
  

   

  Advantages and Benefits of Market Segmentation

  Following are some of the benefits as cited in leading marketing books.
  1. Customer needs
  It is easier to understand the exact needs of the customer and target the marketing strategy at a particular group. It is much easier and more successful to create and promote specific and customised products and services.
  2. Profit Potential
  Mass marketing is a strategy of the past. Target marketing and positioning creates new potential customers and new ideas for new products and services. Companies can create better products and hence maximise their potential profit.
  3. Growth
  Segmenting the markets creates further opportunities for business growth. Specific groups require specific products.
  4. Retaining Customer
  It is a great way to retain customers. Firms can establish a life-long relationship with their consumers via formulating an effective market segmenting strategy.
  5. Right Target Market
  The company’s resources are utilized for producing the right product for the right customer.
  6. Market Share
  Segmenting business and consumer markets is important to maintain existing market share and expand it. A successful company needs to gain competitive advantage by looking closely at the specific needs of customers and devising strategies to provide maximum benefit and value.