20-09-2014, 10:59 AM
Market Segmentation
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Meaning of Market Segmentation
Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them.
The aim of Market Segmentation is to allows the firm to better satisfy the needs of its potential customers.
We can understand this concept of segmentation with a life example of our MBA class.
Development of Market Segmentation
The development of a market segmentation strategy consists of three general phases:
Firstly the firm determines demand patterns, establishes bases of segmentation, and identifies potential market segments.
Then, the firm targets the market through undifferentiated marketing (mass marketing).
Finally, the firm positions it’s offering relative to competitors and outlines the appropriate marketing mix
Criteria for Market Segmentation
An ideal market segment meets all of the following criteria:
It is possible to measure.
It must be large enough to earn profit.
It must be stable enough that it does not vanish after some time.
It is possible to reach potential customers via the organization's promotion and distribution channel.
It is internally homogeneous (potential customers in the same segment prefer the same product qualities).
It can be reached by market intervention in a cost-effective manner.
Bases for Consumer Market Segmentation cont..
Geographic Segmentation:
In geographical segmentation, market is divided into different geographical units like:
Regions (by country, nation, state, neighbourhood)
Population Density (Urban, suburban, rural)
City size (Size of area, population size and growth rate)
Climate (Regions having similar climate pattern)
Advantages of Market Segmentation
Better matching of customer needs.
Enhanced profits for business.
Better opportunities for growth.
Retain more customers.
Target marketing communications.
Gain share of the market segment .
Conclusion
Market segmentation is the identification of the portions of the market that are different from one another. Market Segmentation allows the firm to better satisfy the needs of its potential customers.
So, if you want to understand your customer’s needs and wants properly in order to meet their requirements, better segment your customer base.