Market Segmentation

Market Segmentation may be defined as the process of dividing a potential market into distinct sub-markets of consumers with common needs and characteristics. It is essential for an organisation to divide the market into different segments because the total market for a product or service is quite large and heterogeneous. Segmenting is done on the basis of identifying groups of customers who share a similar set of need and wants. For the segmentation to be effective, the segmentation done should be measurable, sustainable, differential, accessible and actionable.

Segmentation is generally done on the following parameters:

·       Geographic segmentation

The region, city size, climate, etc matter a lot in segmenting the market on the basis of geographic segmentation. The main advantage here is that it reflects the physical location of the market and the market’s attending conditions.

·       Demographic segmentation

Demographic segmentation divides the market on the basis of on the basis of age, sex, income, education, religion, etc. The segmentation of the market on the basis of demographics is quite old. Segmentation on this basis often works as proxy for finding similarity in behavioural patterns.

·       Psychological segmentation

Psychological segmentation is done on the basis of personality, life style, etc. A person’s life style, social class, culture and personality rest at his mind, which can be tapped by resorting to psychological segmentation.

·       Behavioural  segmentation

This is done on the basis of benefits sought, user status, loyalty status, usage rate, etc. Behavioural segmentation is based on the consumer’s response to his requirements.

After a proper segmentation, a marketing mix has to be developed for each segment, and an organisation can go for:

ü  Mass marketing

ü  Multi-segment strategy development and marketing

ü  Single segment strategy development and marketing

ü  Micro marketing

·       Local marketing and

·       Individual marketing

In the next two posts, we’ll take a look at the market segmentation of automobiles and computers.

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