Market segmentation: Management Tips

Market segmentation:

Market is a place in which different needs and wants and has the ability and desire to purchase the goods or services for satisfying their needs. As different Customers have different wants and buying preference, markets are segmented. In a market segment all the buyers or consumers will have same purchase characteristics and wants and purchases the same product for satisfying their needs. This unit explains the need and process of market segmentation, the different alternatives used by a firm for selecting target markets, positioning strategies, targeting strategies and various types of forecasting methods.

Definition:

Market segmentation is a process of classifying a diverse market into identical and similar subunits. In market segments, all the customers have same needs and wants. The main aim of the marketing mix is to help the markets to change their marketing mixes for fulfilling the needs of one or more specific segments. Market segmentation helps the firm to design, price and deliver their products or services effectively for satisfying the target market.

Benefits of market segmentation:

1. Increase in sales volume:  since the product is given according to tasks of particular buyer class, results in higher sales.
2. Specialized marketing: marketing can be more specialized and promotion is suited to the characteristics of the buyers.
3. Increase in Market opportunities: Through segmentation a manufacturer comes closer to particular group of customers, hence they can know the changes in market.

Levels of Market Segmentation:

1. Niche Marketing
2. Local marketing
3. Customization

1. Niche Marketing: A niche is a small Group of customers trying to obtain different types of benefits. Marketers recognize niches by classifying a segment into sub-segment. Niche markets are small and attract only one or two competitors. The marketers of these markets have complete knowledge about the needs of their customers.
2. Local Marketing: Local marketing is a type of target marketing in which the marketing programs are created according to the needs and wants of local customer groups. It is also called as gross root marketing in which the products or services are promoted by communicating its features and advantages and connecting it with distinct and interesting experiences.
3. Customization: In this level of market segmentation, operationally driven mass customization is integrated with customized marketing for designing the products and services according to the needs and wants of the customers.

 Types of Market segmentation:

1. Segmenting Consumer Markets
2. Segmenting Business Markets
3. Segmenting international markets

1. Factors affecting consumer market are Geographic, Demographic, psycho-graphic, and behavioral variables.

2.  Major segmentation Variables for Business marketer.
a). Demographic
b). Operating variable
c). Purchasing variable
d).  Situational factor
e).  Personal factor
3.   Segmenting International Markets:

       Operating in new counties may give new challenges, different countries vary greatly in their culture, economic and political factors affecting international markets:

1. Geographic    b. Economic   c. Political & Legal