Marketers use a wide variety of tools to come up with a marketing stratgey for the organization. The types of products available and introduced, the advertisements, distribution channels and customer touch points are all part of the game. However, a major area where companies fail to recognize is the different needs of the customers.
Categorizing similar needs of customers into clusters is called segmenting the market. The segments can be broken down in terms of customer income, unique needs, geographical conditions, social statuses, education, religion, ethnicity and the list goes on.
There are no rules set in stone to segment a market. As long as you are able to cluster a group of people with similar needs and wants, it can be called a market segment. Once you have segmented the market, the business can cater to each segement based on their unique needs.
Some popular market segments are as follows:
1) Geographic Segmentation
This is a scenario where the market is divided based on the geographical location of the customers. Global marketing heavily relies on this segmentation as they consider one nation to be a unique market. However, it is not mandatory to assume that one nation is one unique market. For an example; although India and Sri Lanka can be considered as very unique markets even though they are situated in close proximity, Denmark and Norway could be clustered together. But depending on the sensitivity of the product to cultural factors these segmentations could change.
2) Demographic Segmentation
This segmentation focuses on factors such as age, gender, education level, income level, religion, ethnicity etc. Age group is a popular segmentation method, for an example, in the confectionary, toys and education businesses. Gender plays a major role in the fashion industry. For an example if a business is looking at opening a clothing store in a city, it should conducted a census and find out the percentage of men and women in the area so it can better cater to the target market.
Likewise, a market can be segmented to any number of manageable sectors and then a business can better focus on one segment.
Depending on the needs of the segments a business can;
- provide one product to the entire market,
- provide one product to several like-minded segments, or
- provide a unique product to all segements of the market.
Importance of Market Segmentation
- better identify the unique and varying needs of a market
- can better cater to the unique needs of the market
- personalized products give more value to customers, hence more customer satisfaction
- easier to handle a smaller segment than handling the entire market
- chances of a product failing in a segment is less
- can focus the business's marketing more effectively to a segment
If you have further questions regarding market segmentation please comment them below.
