What are the characteristics of market segmentation?
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Segmentation means to divide the market place into parts or segments which are definable, actionable and profitable. In other way we can say that, dividing big market place into small parts. Show
Definitions of Market Segmentation
Characteristics of Market SegmentationMeasurable and ObtainableThe size, profile and other relevant characteristics of the segment must be measurable in terms of data. It must be possible to determine the values of the variables used for segmentation with justifiable efforts. This is an important part especially for demographics and geographic variables. RelevantThe size and profit potential of the market should be large in term of economically. Because it helps to understand the profit potential of the company. If a segment is small in size then the cost of marketing activities can not be justified. SubstantialThe segments should be substantial to generate the required returns, that the company has invested in segment. Activities with small segments will give a biased result or negative results. AppropriateThe segments must be relevant to the organizations objectives. Because if the segments will not same as organizations objectives and resources, then chances of meeting the goal will become less. Substantiality implies that market must be lager enough to justify company’s marketing efforts. It must offer attractive opportunities in terms of return on investment. Too small segments are not profitable as the firm has to make separate marketing programme (4Ps) for each of them. 2. Suitability:The segmentation must have overall suitability with firm’s internal and external situation. It must suit with resources, objectives, and policies of the firm. There must be parity, compatibility, and balance between segments and firm’s situations. Irrelevant criteria for segmenting market lead to mismatch. 3. Adequate Demand:ADVERTISEMENTS: It is the basic condition for successful segmentation. Different segments must exhibit adequate demand. Each of the selected segments must be able and willing to buy the company’s offers. 4. Accessibility:The segmentation should be such that a firm can meet reasonably the expectations of selected segments. Firm must serve different segments efficiently. In short, the segments must be sufficiently homogeneous in terms of different bases to enable the company to reach them successfully. 5. Action ability:The segmentation must permit a company to take necessary actions effectively. The firm must be in position to respond different segments firmly. It must be able to tackle the problems and to absorb available opportunities. Market segmentation is the identification of portions of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potential customers. The Need for Market SegmentationThe marketing concept calls for understanding customers and satisfying their needs better than the competition. But different customers have different needs, and it rarely is possible to satisfy all customers by treating them alike. Mass marketing refers to treatment of the market as a homogenous group and offering the same marketing mix to all customers. Mass marketing allows economies of scale to be realized through mass production, mass distribution, and mass communication. The drawback of mass marketing is that customer needs and preferences differ and the same offering is unlikely to be viewed as optimal by all customers. If firms ignored the differing customer needs, another firm likely would enter the market with a product that serves a specific group, and the incumbant firms would lose those customers. Target marketing on the other hand recognizes the diversity of customers and does not try to please all of them with the same offering. The first step in target marketing is to identify different market segments and their needs. Requirements of Market SegmentsIn addition to having different needs, for segments to be practical they should be evaluated against the following criteria:
A good market segmentation will result in segment members that are internally homogenous and externally heterogeneous; that is, as similar as possible within the segment, and as different as possible between segments. Bases for Segmentation in Consumer MarketsConsumer markets can be segmented on the following customer characteristics.
Geographic Segmentation The following are some examples of geographic variables often used in segmentation.
Demographic Segmentation Some demographic segmentation variables include:
Many of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on the age of the children. Psychographic Segmentation Psychographic segmentation groups customers according to their lifestyle. Activities, interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include:
Behavioralistic Segmentation Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic variables include:
Behavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation. Bases for Segmentation in Industrial MarketsIn contrast to consumers, industrial customers tend to be fewer in number and purchase larger quantities. They evaluate offerings in more detail, and the decision process usually involves more than one person. These characteristics apply to organizations such as manufacturers and service providers, as well as resellers, governments, and institutions. Many of the consumer market segmentation variables can be applied to industrial markets. Industrial markets might be segmented on characteristics such as:
Location In industrial markets, customer location may be important in some cases. Shipping costs may be a purchase factor for vendor selection for products having a high bulk to value ratio, so distance from the vendor may be critical. In some industries firms tend to cluster together geographically and therefore may have similar needs within a region. Company Type Business customers can be classified according to type as follows:
Behavioral Characteristics In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such behavioral characteristics may include: What are the 7 market segmentation characteristics?Types of Market Segmentation. Demographic Segmentation.. Firmographic Segmentation.. Geographic Segmentation.. Behavioral Segmentation.. Psychographic Segmentation.. What are the 6 characteristics of a market segment?One, companies rarely create a segment — more often they uncover one.. Identifiable. ... . Substantial. ... . Accessible. ... . Stable. ... . Differentiable. ... . Actionable.. What are 4 characteristics of effective market segmentation?There are four key types of market segmentation that you should be aware of, which include demographic, geographic, psychographic, and behavioral segmentations. It's important to understand what these four segmentations are if you want your company to garner lasting success.
What are the characteristics and benefits of market segmentation?Market segmentation allows you to target your content to the right people in the right way, rather than targeting your entire audience with a generic message. This helps you increase the chances of people engaging with your ad or content, resulting in more efficient campaigns and improved return on investment (ROI).
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