...4.2 Market Segmentation
'The process of defining and subdividing a large homogeneous market into clearly identifiable segments having similar needs, wants or demand characteristics. Its objective is to design a marketing mix based on expectation of customer in the target segment' (BusinessDictionary, n.d). In todays' world there are a handful of big companies who supply to the needs of the entire market; most must break down their market based on certain factors and requirement. Four basic factors that affect market segmentation are as follows:
i. 'Clear identification of the segment
ii. Measurability of its effective size
iii. Its accessibility through promotional efforts
iv. Its appropriateness to the policies and resource of the company' (BusinessDictionary, n.d)
Market segmentation is a marketing term coined to aggregate prospective buyers into various groups or segments that have common needs and responds similarly to a marketing action. Market can be segmented in a number of ways: geographically by region or area; demographically by age, gender, family size or life cycle; psycho graphically by social class, lifestyle or personality; or behaviorally by benefit, uses or response. The objective is to enable the company to differentiate its products or message according to the common dimension of the market segment (Investopedia, n.d).
4.2.1 Types of segmentation
The various types of market segmentation can be described as follows:
Demographic segmentation: In demographic segmentation the market is divided into variables like age, gender, family size, lifecycle, income etc. Demographic segmentation is often associated with consumer needs and wants and are easy to measure. Here is how some marketers have used certain demographics to segment the market: AGE AND LIFE CYCLE: With age consumers wants change. Toothpaste brands like Colgate and Crest offers three main lines of product targeted to kids, adults and older consumer. Pamper also divide its market into various segments based on age. LIFE STAGE describes a condition where people on the same stage of the life cycle differs in their life stages. Like people going through a divorce generally will have different choices in life than people getting married. GENDER: Men and women have different attitudes and behave differently based on socialization and genetic makeup. According to studies in US itself women controls 80% of consumer goods business. Marketers can reach women consumers via media like lifetime, oxygen etc. whereas men can be reached via ESPN, Comedy central, through many Men's magazines etc. INCOME: It's a long standing practice in industries like automobiles, clothing, cosmetics, financial services etc. Levi Strauss has various product line based on income of consumers. GENERATION: Generation X (influenced by rock music), Baby Boomers (huge population of consumers born between 1946 and 1964), Silent generation (born between 1925 and 1945) all have different demographic preferences LGBT (Lesbian, Gay, Bisexual and Transgender), African Americans etc. to name a few demographic variations showcased by various section of people (Kotler & Keller, Marketing Management, 2012).
Behavioral Segmentation: Marketers divide the buyers into groups on the basis of their knowledge, attitude, use or response to a product. Need based segmentation is a widely based approach. To state an example from the US wine industry, the market is segmented based on the behavior of the consumers as: ENTHUSIASTS which comprises of about 12 percent of the market mostly skewing female. IMAGE SEEKER comprises of 20 percent market share skewing male of the age of 35. SAVVY SHOPPERS comprises of 15 percent market share and who doesn't mind shopping a lot. TRADITIONALIST comprises of 16 percent, SATISFIED SIPPERS comprises of 14% who doesn't have much knowledge about various wines and tend to buy the same tested brand and OVERWHELMED which constitutes of 23% market share find buying a good wine confusing (Kotler & Keller, Marketing Management, 2012). To state a real life example one can use the example of mobile phones.
Psychographic segmentation: It is the science of combining demographics and psychology to better understand the buying pattern of consumers. Here buyers are segmented into various groups based on personality traits, lifestyle or values (Kotler & Keller, Marketing Management, 2012). Zara markets itself as the lifestyle brand and people who want latest and differential clothing can visit Zara stores whereas Arrow markets itself as a premium office clothing which attracts the bosses and super bosses of corporates (Bhasin, 2016).
Geographic Segmentation: Geographical segmentation divides the market into geographic segments such as country, state, continent, region etc. The company can operate in a few areas and also can operate in all the areas and pay differentiated attention to specific regional concentration. A common example would be of Nike where they make its consumers used to its products by advertising and sponsoring school and junior club teams (Kotler & Keller, Marketing Management, 2012). The fast food giant McDonalds serves beer in their German outlets whereas they don't have beer in their menu in the USA. This is geographic segmentation based on culture. Also the same organization has also adopted local food in their menu. For example they have introduced McVeggie in India, McArabia in the Middle East and Banana Pie in Brazil based on the preference of the local market (Nair, 2016).
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