The market consists of many types of customers, products, and needs. The marketer must determine which segments offer the best opportunities. Consumers can be grouped and served in various ways based on geographic, demographic, psychographic, and behavioral factors.
Market segmentation is the division of markets into distinct groups of buyers who have different needs, characteristics or behaviors and who might require separate products or marketing programs.
Buyers differ in their wants, locations, resources and buying attitudes. The process of converting heterogeneous market into homogenous markets is called is called segmentation. Every buyer has different approaches towards product. Their wants and need are different, so separate market programs can satisfy well the buyers wants and needs.
Every market has segments, but not all ways of segmenting a market are equally useful. A market segment consists of consumers who respond in a similar way to a given set of marketing efforts. In the car market, for example, consumers who want the biggest, most comfortable car regardless of price make up one market segment. Consumers who care mainly about price and operating economy make up another segment.
Need for Market Segmentation
The marketing concept calls for understanding customer needs and satisfying them better than the competitor. However all the customers do not have the same need and it is not possible to satisfy the entire customer needs hence the need for market segmentation.
Levels of Market Segmentation
Buyers have different and unique needs and wants. Every buyer is potentially a separate market. Ideally, then a seller might design a separate marketing program for each buyer. Some companies serve buyers individually, many others face larger number of smaller buyers and do not find complete segmentation. Thus market segmentation can be dividing into:
- Mass Marketing
- Segment Marketing
- Niche Marketing
- Micro Marketing
1. Mass Marketing
Mass marketing is to produce the same product for all the customers. In this segments producer act for:
- Mass production
- Mass distribution
- Mass Promotion
The traditional argument for mass marketing is that it creates prospective markets, which helps to minimize the cost and affected price to settle it low. However, many factors now make mass marketing more and more difficult and in these days it is impossible to follow mass marketing because it is not possible to produce one product and serve different group of customers. In this situation mass media played an important role. Many producers following this now turn to segmentation market. No wonder some have claimed that mass marketing is dying. Many businesses are retreating from mass marketing to segmented marketing.
2. Segmented Marketing
This segment recognizes that buyers vary in their needs, behavior, perception. The process of isolation broad segment, which make a market and can bitterly understand the wants and needs of customers. In fact, it sells models for segments with different combinations of age and income. For instance General Motors designed its Buick Park Avenue for older and higher income consumers. It produces better results as compared to mass marketing. A producer can market it product efficiently, and give good results to its customers.
3. Niche Marketing
Large groups in the market, which is identifiable, it defines as a segment more precisely, by dividing a segment into sub segments. Niche gives a good opportunity to small companies, and they can allocate their resource by serving niches, which are overlooked by large companies. Niche offers smaller companies an opportunity to compete by focusing their limited resources on serving niches that may be unimportant or may overlooked by larger competitors.
4. Micro Marketing
Micro-marketing adopt products and marketing programs to match the taste of specific localities and individuals. Micro Marketing can be divide in to Local Marketing and Individual Marketing.
a. Local Marketing
Adopting brand and promotion to the wants and needs of local customers like cities, specific stores. But it has some drawbacks. It increases manufacturing and marketing cost by reducing economies of scale.
b. Individual Marketing
Adopting products and marketing programs to the needs of individual customers. Through mass communication prevalence individual marketing was locally ignored, but new technologies powerful computers, all have combined to foster mass customization.
Requirements for Market Segmentation
In addition to having different needs, for segments to be practical they should be evaluated against the following criteria:
– Identifiable: the differential attributes of the segments must be measurable so that they can be identified
– Accessible: the segments must be reached through communication and distribution channels
– Substantial: the segments should be substantially large to justify the resources required to target them
– Unique needs: to justify separate offerings, the segments must respond differently to the different marketing mixes.
– Durable: the segments should be relatively stable to minimize the cost of frequent changes