Levels of Market Segmentation

Different approaches are used to segment a large market into market segments, each of which is unique in terms of its response to a company’s product and service offerings. Market Segmentation can take in four places as shown in the below diagram.

Segmentation

Mass Marketing

This strategy was earlier used by most organizations, now normally seen in small business organizations. A small organization will produce its products in with similar features in bulk and target it to all the consumers irrespective of their preferences.

The seller engages in mass production and uses mass distribution system to reach all consumers in the market. The promotional and marketing activities are also generic. This concept is profitable as mass production lowers the cost of production and margin for profits is high due to this.

The proliferation of advertising media and distribution channels is making it difficult to practice “one size fits all” marketing. No wonder some have claimed that mass marketing is dying.

Segment Marketing

Segment market is division of market into smaller markets which have similar needs and demands. This type of marketing helps the marketer to connect with every type of consumer in the best possible way. The promotional and advertisement activities are based on each segment catered specifically to the needs of that segment. Products here are carefully designed to meet the needs of each segment served in contrast to mass marketing, where same product is offered to all.

The company can create a more fine-tuned product/service offer and price it appropriately for the target audience. The choice of distribution channels and communications channels becomes much easier. And the company may face fewer competitors if fewer competitors are focusing on this market segment.

Niche Marketing

A Niche market is a more narrowly defined group, typically a small market which has not yet been well served. A company might create a niche market and develop highly specialized products or services to meet the customers’ needs that aren’t being met by other offerings.

Advantages of niche marketing:

  • High level of specialization helps in a reduction of cost
  • Help to occupy a dominant market position within the chosen niche
  • Creates a strong brand image
  • No competition or little competition

Micro Marketing

Here marketing activities are tailored to specific narrowly defined demographic, psychographics behavioral segments. In this case, products are specialized to meet a very specific need of potential customers and marketed primarily to that customer set.

Micro Marketing is further classified into three categories

1. Local Marketing – marketing tailored to the needs and wants of a local consumer.

2. Individual Marketing – also called as one to one marketing, concept which was earlier followed by cobblers and tailors. A manufacturer will customize the offer, logistics, and financial terms for each major account.

3. Mass Customization – Preparing individually designed product and communication on large scale

 

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