A market is the aggregate of a given product. These consumers vary in their characteritics and buying behaviour. It is thus natural that many different segments occur within a market. Marketers usually divide the heterogenous market for any product into different segements of relatively homogeneous characteritics. The process of fragmenting whole market into sub-markets is known as market segmentation.
Benefits of Market Segmentation:
- Segmentation helps the marketer to distinguish one customer group from another within a fiven market and therby enables him to decide which segment should form his target market.
- It enables the marketer to identify the real needs of the target buyers and to develop marketing offers that are most suited to each group.
- It makes the marketimng effort more focused, more efficient and economic by concentrating on segments that are most profitable and will be the customers of the market offer.
- It benefits the customer and they can buy specialised products that cater to their specific needs and wants.
- When segmentation attains high sophistication, customers and companies can choose each other and stay together for mutual benefits.
Bases of Segmentation:
- User Status: Non-user, ex-user, potential user, first time user, regular user.
- Usage Rate: Bulk buyers, small scale buyers, moderate buyer.
- Benefits: Quality, service, economy, speed.
- Occasions: Regular, special.
- Loyalty Status: Hardcore loyals, split loyals (two or more brands), shifting loyals, switchers.
- Readiness Stage: Unaware, aweare, informed, interested, desirous, intending to buy.
- Attitude: Enthusiastics, positive, indifferent, negative, hostile.
Properties of an Effective Segement:
- Segments must be distinguished from one another.
- Potential demand of the segment should be measurable.
- Segment should be easily accesible and servable.
- Segment should have an apropriate size, i.e. significant number of buyers.
- Segment shoulkd be growing.
- It shoulkd be profitable.
- Segement needs should be compatible with the marketers product utility.