Question

What is market segmentation? And why is market segmentation important in a company? How to arrange and develop market segmentation?

Answer 1

A] Market Segmentation :

Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations.

B] Market segmentation important in a company :

1. Market segmentation makes it easier for marketers to personalize their marketing campaigns.By arranging their company’s target market into segmented groups, rather than targeting each potential customer individually, marketers can be more efficient with their time, money, and other resources than if they were targeting consumers on an individual level. Grouping similar consumers together allows marketers to target specific audiences in a cost effective manner.

2. Market segmentation also reduces the risk of an unsuccessful or ineffective marketing campaign. When marketers divide a market based on key characteristics and personalize their strategies based on that information, there is a much higher chance of success than if they were to create a generic campaign and try to implement it across all segments.

3. Marketers can also us segmentation to prioritize their target audiences. If segmentation shows that some consumers would be more likely to buy a product than others, marketers can better allocate their attention and resources.

C] Arrange and develop market segmentation :

1. Identify the target market : The first and foremost step is to identify the target market. The marketers must be very clear about who all should be included in a common segment. Make sure the individuals have something in common. A male and a female can’t be included in one segment as they have different needs and expectations.

eg. The target market for Rado, Omega or Tag Heuer is the premium segment as compared to Maxima or a Sonata watch.

2. Identify expectations of Target Audience: Once the target market is decided, it is essential to find out the needs of the target audience. The product must meet the expectations of the individuals. The marketer must interact with the target audience to know more about their interests and demands.

eg. Kellogg’s K special was launched specifically for the individuals who wanted to cut down on their calorie intake.

3. Create Subgroups : The organizations should ensure their target market is well defined. Create subgroups within groups for effective results.

Eg. Cosmetics for females now come in various categories.

• Creams and Lotions for girls between 20-25 years would focus more on fairness.
• Creams and lotions for girls between 25 to 35 years promise to reduce the signs of ageing

4. Review the needs of the target audience : It is essential for the marketer to review the needs and preferences of individuals belonging to each segment and sub-segment. The consumers of a particular segment must respond to similar fluctuations in the market and similar marketing strategies.

5. Name your market Segment : Give an appropriate name to each segment. It makes implementation of strategies easier.

eg. A kids section can have various segments namely new born, infants, toddlers and so on.

6. Marketing Strategies : Devise relevant strategies to promote brands amongst each segment. Remember you can’t afford to have same strategies for all the segments. Make sure there is a connect between the product and the target audience. Advertisements promoting female toiletries can’t afford to have a male model, else the purpose gets nullified.

eg. A model promoting a sunscreen lotion has to be shown roaming or working in sun for the desired impact.

7. Review the behavior: Review the behavior of the target audience frequently. It is not necessary individuals would have the same requirement (demand) all through the year. Demands vary, perceptions change and interests differ. A detailed study of the target audience is essential.

8. Size of the Target Market: It is essential to know the target market size. Collect necessary data for the same. It helps in sales planning and forecasting.