What is a Market Segmentation?
Market segmentation is the classification of homogeneous categories of potential buyers with similar characteristics and behaviour. If these groups have similar requirements or react similarly to specific marketing strategies, businesses must make sure that there is a procedure in place to categorize potential buyers in order to satisfy the needs of consumers.
What is the reason why Important Market Segmentation is Important?
Today, businesses need to be focused on their customers to stay successful in the ever-changing business world. To achieve this, it is necessary for an organization to separate its markets to be able to respond more efficiently and efficiently to customer demands. The aim is to categorize individuals or groups within a market based on their attributes and behaviour so that they can create the most efficient marketing mix to maximize profits.
What is the best time to segment your market?
Do not try in the market segmentation process if the estimated costs are higher than the anticipated growth in revenue and sales. Make sure you do your homework and calculate before deciding if it’s worth the effort in segmenting your marketplace. Here are some suggestions to think about:
One Product and multiple segments
Multiple products and multiple segments
Massive customization (Segments of one).
One Product & Multiple Segments
Instead of creating the latest products on a regular basis, businesses might opt to market only one product that is offered across two or three markets. This way, companies can avoid the extra expenses associated with the development and production of the new product (i.e. R&D, engineering, advertising, etc.). In this case, it is beneficial for the firm to divide its markets to find new opportunities to sell the same offering of products, particularly if the company does not have the resources to develop fresh products or offerings.
Multiple Products and Multiple Segments
The name suggests that companies must perform market segmentation when they offer products targeted at different markets. An excellent example is Nike, a conglomerate within the world of sportswear, offering a variety of styles of clothing to different users. The company could also take advantage of using the “two-tier” marketing strategy in which similar goods or services are offered at the high and low end of stores, thus gaining access to different markets. Look at Gap as opposed to Old Navy – Gap is considered to be the top-end version of clothing compared to Old Navy. While this method costs more but many think it’s worth it since it is more focused on customers and meets the needs, wants and needs of targeted markets more efficiently. If you run an enterprise that sells many products, it will be wise to divide your customers to offer the correct products at the right place and at the proper timing.
Mass-Customization (Segment of one)
Thanks to the rapid development of technology, which includes the Internet, companies are now able to create large-scale customization of their products. Two examples of businesses using this method are VistaPrint as well as CustomInk. VistaPrint allows customers to personalize items, such as business cards, according to their preferences. While CustomInk allows users to print almost anything they like on T-shirts, sweaters, hats, etc. By offering customers the option to customize products to their tastes, These companies increase their customer-relationship management (CRM) and boost their bottom line in tandem.
What are the steps to take? Market Segmentation?
There are five essential steps that form the foundation for successful market segmentation:
Recognize the needs, wants, and wants of the market and needs.
Group potential buyers into segments.
Group products and services that can be sold in categories.
Find out the size of the market(s).
Determine your target markets and take the necessary actions to reach these groups through your marketing strategies.
In the final analysis, a fine line exists between market segmentation and the differentiation of products. It is essential for companies to find the perfect equilibrium between them to achieve success and be profitable. In adhering to the principles that are listed above, businesses can identify and concentrate on their objectives and segment their markets to improve marketing strategies; and make new markets.
According to Philip Kotler wisely stated, “good businesses will satisfy demands; great businesses will make markets.” In this regard, I’m sure this article will provide you with the best strategies to create a successful company capable of gaining new customers.
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