Introduction to Market Segmentation
- Segmentation is the process of dividing the market and the target audience based on their commonalities and homogeneity, the different attitude of consumers towards the product(s)/service(s), distinctiveness, behaviour traits, their social strata, demographic factors like age, family size, marital status, gender, and many other factors. Market segmentation business is the cornerstone of the market research and the success of any business. Market segmentation helps to segregate the consumer market and helps to identify the promising markets in which the business can flourish. It helps the marketing team in planning and organizing the marketing campaign. The target market includes the market segments which are profitable to both the consumers and the company. Market segmentation and target marketing both serve as a very useful technique in saving time, money, and efforts engaged in the marketing of the product/services as targeted marketing focusses on targeting the consumers or audience as per different consumer habits.
- It is important to understand that if the market is not studied in advance and the marketers don’t focus on the targeted market, the effect of marketing is diluted and the company or the marketers tend to spend unnecessary time, money, and resources on the group of the non-profitable consumer markets. Marketers and the company use the market segmentation and targeting practices to create a competitive and profitable market with a higher rate of success and minimal risks of loss. A deeper understanding of the target market and targeted consumers assist the marketers to design, develop, organize and promote products in a more efficient and effective manner and helps to gain the trust of the consumers in the market.
Benefits of the Market Segmentation
Benefits of the Market Segmentation are as follows:
1. Higher Rate of Success
Market segmentation means to study your market, to be more precise it helps to divide a bigger market into smaller modules and lets the marketers know the potential of the market/consumers which reduces the risk of loss and thus there are higher chances of success for the business.
2. Increases Profitability
Market segmentation is a very effective process for business and it helps the business to target particular segments of the market and thus helps to find better business opportunities pertaining to that particular market segment. The marketers can thus, strategize their campaigns as per the chosen market segment needs and requirements and helps to increase the business profitability. This technique lets the companies focus on one particular segment rather than the whole market which in return gives increased profit.
3. Increases Competitiveness
When the focus and the target market is clearly identified to the marketers and the business team, then comes the competitiveness. As the target market is known to the business, the competition in the market will increase and the marketing team will come up with new innovative ideas to promote their brand better to stand out among the competitors. Different offers and discounts will help the marketing team to attract more consumers and knowing your consumers better will help gain brand loyalty.
4. Retention of Customer
Retaining customers is very crucial for the business and market segmentation helps in customer retention. Once the business knows the consumers, their needs can be catered well and the customer’s experience with the market brand will help to connect with the product/service like the hospitality sectors. Consumers mostly prefer the products/services they have experienced especially in the cases of airlines and hospitals.
5. Creates and Provides Market Opportunities
Market segmentation helps to identify and recognize potential market opportunities. The market segments where the consumers are less satisfied with the other brands are the opportunity areas for the company to focus and to establish their brand. The companies can work in these segments and provide a better product to the consumers than the already existing ones in the market and earn the consumer’s loyalty. Thus, market segmentation gives excellent market opportunities.
6. Effective Market Campaigning
As the business knows the consumers and their needs, the marketing team can customize or personalize their marketing campaign accordingly and organize their strategies as per the need of the market which is directly proportional to the success of the business.
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7. Wise and Efficient Use of Resources
Market segmentation helps to save unnecessary time and effort engaged in the marketing campaign by identifying the potential areas of the market. Thus it helps to use the company resources and money in a more streamlined and efficient manner.
8. Higher Customer Satisfaction
Market segmentation directs or guides the company to make its marketing efforts consumer and market-oriented in a specific market segment, and lets the companies serve the consumers better, increasing customer satisfaction which is the ultimate goal of the business.
9. Cost-Efficient
Efficient market research and market segmentation help to save a lot of useful time, money, and resources invested in the marketing campaign. Also as the customers are grouped as per their needs, commonalities, choices, statuses, etc. it becomes easy to target the audience for the marketers. Thus through market segmentation, the campaign management process is conducted very smoothly and efficiently in a cost-effective manner.
10. Know your Customer Better
Market segmentation helps to study the market needs and potential consumer which reduces the risk of loss or unsuccessful marketing campaigns. As the market research is done in advance before the campaign the chances of being successful are much more as the segmentation of the market helps the marketers to do their homework for marketing. The marketers can strategize and plan their campaigns as per the generic needs of the potential consumers as per the market research.
It is very important to understand what the consumer and the market demands and what are their actual needs. Effective marketing can be implemented only if the potential and promising market has been identified else all the efforts of marketing goes in vain. Companies must always put themselves in the place of consumers first and must analyze what they would have expected out of the product/services if they would have been in their shoes.
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