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Market Segmentation

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:

Geographic Segementation: Segmenting market on the basis of factors like region, state, district, urban/rural, climate, etc.
Demographic Segmentation: Segmenting cutomers on  the basis of factore like age, sex, martial status, family size and structure, race, religion, community, language, occupation, income, education etc.
Psychographic Segmentation: Segmenting customers on the basis of psychological factors like personality traits, lifestyle, socio-economic classes, value systems etc. The marketing researcher, Emanuel Denby coined the term psychographics.
Behavioural Segementation: Marketers can be segmented on the basis of buyer's behaviour as well. Buying behaviour includes
  • 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. 

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