Market segmentation is a strategy that is applied in marketing. It refers to the identification of sections of the market that are different from the others. The main aim of market segmentation is to allow the sales or marketing program to focus on the particular subjects or consumers that are most likely or have the highest chances of buying your product. If the process is conducted successfully, it will help in ensuring the highest returns for your marketing expenditures.
One significant aspect of market segmentation is that it is a process that requires thorough research on the market, thus can be quite costly. That is one of the reasons why it has mainly been reserved for major companies with highly differentiated product lines or are serving larger markets. To the small businesses, a majority discover the segments that they serve best through trial and error of dealing with consumers and stocking products that are highly preferred by their particular clientele.
In conducting market segmentation, there are several kinds of marketing strategies that can be applied ranging from mass marketing to even on-on-one marketing. Several businesses realize that considering that not all customers are alike in every aspect, it is unlikely that they can please all in a market with just one product. Besides, they are also of the realization that it is rarely feasible to come up with a distinct product for each customer. Instead, a number of businesses try to enhance their odds of attracting significant customer base through division of the overall market into segments.
After businesses have segmented the market, they should then try to match their products and marketing mix more closely to the needs of one or more sections. In order to define the various sections of the market, various businesses rely on customer characteristics, also referred to as segmentation bases. Some of those that are commonly used by many companies include age, income, gender, buying behavior and geographical area.
The application of market segmentation strategy can be most effective when the overall market is comprised of a variety of smaller segments whose members have certain common characteristics or needs. Through market segmentation, businesses are able to divide such a market into various homogenous groups and also develop separate products and marketing programs that can exactly suit the needs of one or more segments.
In order to be successful with market segmentation strategy, the customer segments identified must be measurable by clear traits. The segments must be large enough to constitute a market and reaching them should also be easy to predict. Besides, they must also be predictably responsive to marketing. The sections of the market that are identified must be able to remain stable for a long duration of time and not just one-time aggregations.
For the successful implementation of market segmentation strategy, market research techniques must be employed to help in finding patterns of similarity among consumer preferences in a market. The preferences of customers will fall into distinct clusters depending on the characteristics of the population that can be identified.
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