Most organizations do not have adequate resources to target a large market, which is why they need to target a specific market segment that needs their products and services. In order to achieve this, they need to divide the large market into smaller and exclusive segments through market segmentation.
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Market segmentation involves dividing a large market of prospective customers into clearly identifiable segments, based on certain criteria or characteristics. These segments consist of prospective customers who tend to respond similarly to marketing strategies; customers who share common interests, needs, wants and demands.
Most organizations apply the market segmentation strategy in order to achieve a maximum market response from initial marketing resources, by recognizing differences in the response characteristics of various parts of the market. Market segmentation has a way of placing the steps of the company on a firm factual foundation, it also reveals characteristics of the market that are not clear, and identifies ways of approaching the market that will be predominantly effective
Types Of Market Segmentation
- Geographic Segmentation –You can divide an audience based on their locations, such as a town, land, rural or metropolitan area, zip code or country.
- Demographic Segmentation – A target audience can be divided based on certain demographic qualities such as age, gender, occupation, education, income and nationality.
- Psychographic Segmentation –Psychographic segmentation divides a group of customers based on their personality traits, values, social status, interests, attitudes and lifestyles.
- Behavioural Segmentation –A company can segment their market based on consumer’s behaviours, such as intensity of product use, brand loyalty, user behaviours, price sensitivity, and technology adoption.
Importance Of Market Segmentation
Several benefits exist with understanding and defining market segments, some of these benefits include:
When a company breaks down their large audience into clear segments, it helps them to focus on what segments they want to target with specific products, services, content and campaigns, and this ensures that they target the right segment with the right product, which will yield larger sales and profit.
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Ability To Meet Customers’ Needs
Market segmentation gives the company the ability to carefully meet the needs of their customers, because the previous large audience with a variety of needs has been broken down, thereby, enabling the company to meet specific needs of their customers and equally serve them better.
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This occurs often with demographic segmentations, because when a company identifies and understands their segments and how to market to a segment in a particular location, they can expand immediately into another nearby location with similar products and services.
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Proper Allocation Of Marketing Budget
It is with the aid of market segmentation that organizations are able to come up with a budget plan for each market segment. It is also on the basis of market segmentation that the marketing budget is adjusted for a particular region or locality, as a specific budget can be allocated and adjusted according to different market segments.
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Targeted Communication Among Segments
Undoubtedly, communication is more effective when it is targeted at a particular audience, this is why market segmentation is very important, because the large audience has been broken down into various segments, thereby, making communication more effective.
Every market segment has its own effective mode of communication, this makes it easier for organizations to identify the mode of communication for each segment. Communication Platforms to be used to target different segments will be different also.
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Effective Evaluation Of Marketing Activities
Market segmentation helps various organizations to identify and evaluate the marketing potentialities of their products. This evaluation helps to regulate production and the use of resources in the most profitable manner, because immediately the product becomes outdated, the product line could be terminated.
In general, Segmentation helps organizations to be more efficient in terms of time, money and other resources. It also gives room for companies to learn about their customers and gain a better understanding of customers’ needs and wants, in order to modify their campaigns to meet customers’ needs.
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