The purpose of market segmentation is to leverage scarce resources; in other words, to ensure that the elements of the marketing mix, price, distribution, products and promotion, are designed to meet particular needs of different customer groups. Since companies have finite resources it is not possible to produce all possible products for all the people, all of the time. The best that can be aimed for is to provide selected offerings for selected groups of people, most of the time. This process allows organizations to focus on specific customers’ needs, in the most efficient and effective way.
Why do we need Market Segmentation? Well, I (as a male) would of course not like to receive promotional advertisements of Lipsticks, Skirts etc repetitively. That’s where the Market segmentation comes in.
There are number ways in which market can be segmented. The main bases are:
Geographic:
The following are some examples of geographic variables often used in segmentation.
• Region: by continent, country, state, or even neighborhood
• Size of metropolitan area: segmented according to size of population
• Population density: often classified as urban, suburban, or rural
• Climate: according to weather patterns common to certain geographic regions
Demographic:
Some demographic segmentation variables include: ( Of course these will help a lot)
• Age
• Gender
• Occupation
• Education
Psychographic:
Psychographic segmentation groups customers according to their lifestyle. Some psychographic variables include:
• Activities
• Interests
• Opinions
• Attitudes
• Values
Behavioralistic:
Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic variables include:
• Benefits sought
• Usage rate
• Brand loyalty
• User status: potential, first-time, regular, etc.
• Readiness to buy
• Occasions: holidays and events that stimulate purchases
Behavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation.
A successful Market Segmentation not only invoke interest of customers in Brand but also creates a Happy and Loyal Customer.
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