What is Market Segmentation and why do marketers do it?
Market segmentation is a technique where people share products of different people and organizations which have one or more characteristics which develop their needs and services. A true market segment requires perfection in many areas, it is different in terms of packaging and advertising from other segments, it is homogenous and it responds to the market stimulus. The term is used usually when the criteria of the consumers is divided into groups of identical products so that they could be charged at various amounts.
Market segmenting is a process in which the company divides the market into two distinct groups, wants and needs, behavior and the services required or rendered in the market. This division of the market is done on the basis of its requirement by the public and this has a purpose or an objective (Margarella, 2003). These are divided on general criteria and are done by the industry. The process of segmentation is very different from targeting a product but it is the positioning of designing of an appropriate market mix for each segment.
The overall intention or the goal which is to be achieved is to target the groups of similar customers or potential customers. The segmentation is a benefit for the customers because improved segmentation can increase the satisfaction of the customers by giving the right product on the right place at the right time and in the right price to them. This helps in understanding consumer behavior and these strategies help in attracting the consumers and build up their confidence (Jensen, 2008). Market segmentation is done by those organizations which want to retain their customers.
Retention of customers can be maintained by this technique and the customers are also tagged by this process or way. Certain variables or principles are kept in view before making and segmentation. The most important is the gender. The product which is to be advertised is actually for whom is it a ladies product or gents product, it could be baby product etc. after this the age group is targeted. The product is either for which age group, is it for babies, teenagers, adolescence, adults or is it for the elderly citizens? Next comes the income, the product which is been segmented is done after keeping in view the income of the people.
The prices of these products are lowered to attract the cream of the crowd and make them their customers. If the product is a family product the complete family is targeted (Marketing/Product Management, 2009). The language of the product is also used which could be understood by the crowd which is targeted in the product. The occupations of the people who are targeted are also kept in the view and then the decisions are taken. Next important is the religion if it is a religious product then the religion is given complete importance.
These factors which are kept in view before planning any market segmentations are the demographic factors or variables. For example if the company NIKE does segmentation it will either target the sportsmen or the teenage group of people. It has least importance for the elderly people and for those whose income is low or average. People with occupations of teaching, nursing , engineering, banking and many more do not require segmentation in this area where as if this segmentation is done by any other reputed company such as P&G (Gombeski, 2008).
P&G is an organization with a high rapport and markets a variety of products and numerous customers and market segmentations. Here the products of daily use would be targeted and this will increase the number of customers. Those will be attracted who were low in their income before but due to the reduction of prices in groups they are able to purchase. There are even some other factors such as the weather. The product should be segmented in that weather in which it is useful. For example sweaters should be segmented in winters and not in hot summers, this would tag more consumers here and the segmentation will not fail.
The density of area should be kept in mind. People of the rural areas using products which are very expensive should not be shown as many of them would not even understand what the product is. So the density should also be checked. Some products are not worldwide popular therefore they are demanded in few countries so the product should not be segmented in those countries where it is not demanded. These are the geographic variables which help in making appositive market segmentation (Etzel, Walker & Stanton, 2000).
For example, Unilever another very reputed company of the world has many products which are very expensive and are used by the upper class society only. Therefore these products should not been shown to the rural society as may be they could not get the use of that as it is out of their reach after segmentation and its usage is not understood by them (How to in Marketing? , 2009). Above all these factors there are other factors too such as behavioral , techno graphic and more which are used to derive a distinct market segment are very important. Without this segmentation can fail or be called negative.
The marketers do it to retain their customers, sell their products to the consumers on little profit but still earning profit by the new buyers in the market. These new buyers make a big share in the new profit of these organizations (Kotler, Brown, Adam, Burton & Armstrong, 2007). The price discrimination also helps the lower income people to purchase. Market segmentation technique is quite responding and is popular worldwide especially in international organizations and it has shown positive response that is why marketers do this to increase their sales and number of the customers while lowing a little amount of profit.
References Etzel, M. J. , Walker, B. J. , Walker, S. , & Stanton, W. J. (2000). Marketing. New York: McGraw-Hill Education. Gombeski Jr. , W. R. (Summer 2008). Marketers are likely to get smarter. Marketing Health Services , 3. How to .. In Marketing. (n. d. ). Retrieved May 9, 2009, from Marketing BlogSpot: http://howtoinmarketing. blogspot. com/2008/04/strategic-marketing-flow-chart. html Jensen, M. B. (June 2008). Planning of online and offline B2B promotion with conjoint analysis.
Journal of Targeting, Measurement & Analysis for Marketing , 203-213. Kotler, P. , Brown L. , Adam S. , Burton, S. & Armstrong, G. (2007). Marketing, 7th Ed. , Pearson Education Margarella, F. J. (Aug. 2003). Relationship Marketing (AN 10756377). Club Industry , 20. Marketing Know-How Exchange. (2009). Retrieved May 9, 2009, from MarketingProfs: http://www. marketingprofs. com/ea/index. asp Marketing/Product Management. (2008). Retrieved May 9, 2009, from Microsoft: https://members. microsoft. com/careers/careerpath/marketing/product. mspx