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. 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. 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. 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. To be useful, segments must be measurable, substantial, accessible, differentiable, and accountable.' - Philip Kotler Market segmentation divides the market into different subgroups. A market segment consists of a group of customers who have similar needs and wants. It is the marketer's goal to identify the appropriate subgroups of consumers. Since segmentation is so important to marketing strategy, let's take a look at why that is. Segmentation definitionSegmentation is the process of dividing a market into groups of consumers that share similar characteristics and attributes. The market is defined by the group of people who would potentially be interested in your products or services. They are people with wants and needs, as well as the ability and willingness to buy products and services. It is possible to segment markets based on descriptive characteristics like demographics or geographic location. Another type of segmentation involves looking at the different types of behaviour demonstrated by a consumer group. Types of segmentationFigure 1 below shows the four different types of segmentation. Demographic segmentationDemographic segmentation includes dividing your market into different subgroups based on demographic factors. It is quite common for marketers to segment based on demographics, as demographic factors are often associated with the wants and needs of consumers. Demographic factors are also relatively easy to measure. For example, measuring someone's age is easier than measuring their values. Popular demographic variables used to segment markets are:
Geographical segmentationGeographic segmentation involves dividing the market into geographical groups like countries, states, cities, or neighbourhoods. Geographic segmentation can be a useful tool for marketers, as certain customers from different parts of a country could have different wants and needs. For example, people who live in rural areas of a country might have different needs than those living in large cities. It is also possible that people living in different parts of the world will have different needs due to the climate of their country. People living in the Alps want effective winter tires for colder months. On the other hand, winter tires will not be one of the needs of consumers living in Jamaica. Psychographic segmentationPsychographic segmentation is a technique in which consumers are divided based on psychological traits that influence their purchase patterns. In psychographic segmentation, consumers are divided into groups based on psychological and personality traits, values, or lifestyle. Sometimes people in the same demographic group can exhibit different psychographic traits. Psychographic segmentation takes into consideration the 'how' and 'what' people do in their lives. Psychographic segmentation is beneficial to organisations, as it helps them understand consumers' thought processes. Dividing your customer base into subgroups based on their opinion or values on a certain topic or their lifestyle (food habits, daily activities). Behavioural segmentationIn behavioural segmentation, marketers divide consumers into subgroups based on their behaviour when making purchase decisions. This could be based on their knowledge of, attitude toward, usage of, or response to a product or service. There are four ways you can approach this topic:
Benefits of market segmentationMarket segmentation is a very useful marketing tool for businesses. Segmentation can guide businesses in making appropriate market strategies by gaining useful insight into consumers. Here are some of the main advantages of market segmentation.
Market segmentation exampleImagine you are a marketing manager at Coca-Cola. You interview some of your customers, talk to your sales team, and look at previous sales data. Based on this data you find out that it would be most effective to create multiple customer segments. Demographically, you segment customers based on family size. You find that you can divide customers into different groups - individual buyers who tend to purchase small cans of Coca-Cola, smaller families who tend to purchase large bottles of Coca-Cola, and larger families who tend to purchase family packs or value packs of Coca-Cola. Psychographically, you segment your customers based on lifestyle. Here, you find that there are customers who have busy lifestyles, who occasionally purchase cans of Coca-Cola from an office vending machine as a quick caffeine boost during the day. You also notice that there are customers who purposefully go to the shop in search of Coca-Cola products. Behaviourally, you segment your customers based on loyalty. Here you find that there are hardcore loyals who only drink Coca-Cola when it comes to soft drinks. You also notice that there are shifting - loyal customers who used to drink Coca-Cola but now drink Pepsi. Finally, you can also group some customers into the 'switchers' category - they are not loyal to any soft drink brand. Segmentation - Key takeaways
What refers to the process of dividing the total market into several groups with similar characteristics quizlet?Market segmentation is the process of dividing a total market into several homogeneous groups. It is used in identifying a target market for a good or service. Segmentation is the key to deciding a marketing strategy.
What refers to the process of dividing the total market into?Market Segmentation. The process of dividing the total market into groups whose members have similar characteristics. Market Targeting. evaluating each market segment's attractiveness and selecting one or more segments to enter.
Is dividing a market into groups whose members have similar characteristics?As its name suggests, market segmentation is the process of separating a market into sub-groups, in which its members share common characteristics. To meet the most basic criteria of a market segment, three characteristics must be present: there must be homogeneity among the common needs of the segment.
Which type of market segmentation divides people into groups based on personal attributes?Demographic segmentation classifies the market into groups based on characteristics such as age, gender, and income level.
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