4.1 Market Segmentation Strategies

Market segmentation is all about dividing customers into groups with similar traits. It's like sorting your laundry - you wouldn't wash your whites with your reds, right? Companies use this to tailor their products and marketing to specific groups.

There are different ways to slice and dice the market. You can group people by age, income, or even personality. For businesses, you might look at industry or company size. The goal is to find the best way to reach and serve each group.

Types of Market Segmentation

Segmentation Based on Customer Characteristics

Top images from around the web for Segmentation Based on Customer Characteristics

• 

  Choosing a Segmentation Approach and Target Segments | Principles of Marketing View original

  Is this image relevant?

• 

  Reading: The Purpose of Market Segmentation and Targeting | Principles of Marketing View original

  Is this image relevant?

• 

  Reading: Defining Your Target Market | Principles of Marketing View original

  Is this image relevant?

• 

  Choosing a Segmentation Approach and Target Segments | Principles of Marketing View original

  Is this image relevant?

• 

  Reading: The Purpose of Market Segmentation and Targeting | Principles of Marketing View original

  Is this image relevant?

1 of 3

Top images from around the web for Segmentation Based on Customer Characteristics

• 

  Choosing a Segmentation Approach and Target Segments | Principles of Marketing View original

  Is this image relevant?

• 

  Reading: The Purpose of Market Segmentation and Targeting | Principles of Marketing View original

  Is this image relevant?

• 

  Reading: Defining Your Target Market | Principles of Marketing View original

  Is this image relevant?

• 

  Choosing a Segmentation Approach and Target Segments | Principles of Marketing View original

  Is this image relevant?

• 

  Reading: The Purpose of Market Segmentation and Targeting | Principles of Marketing View original

  Is this image relevant?

1 of 3

• Market segmentation involves dividing a market into distinct groups of consumers with different needs, characteristics, or behaviors who might require separate products or marketing mixes
• Demographic segmentation divides the market into segments based on variables such as age, gender, income, occupation, education, religion, race, and nationality
• Psychographic segmentation divides buyers into segments based on social class, lifestyle, or personality characteristics (adventurous, status-oriented)
• Behavioral segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses to a product (occasion segmentation, benefit segmentation, user status, usage rate, loyalty status, buyer-readiness stage, attitude)
• Geographic segmentation calls for dividing the market into different geographical units such as nations, states, regions, counties, cities, or even neighborhoods (climate, population density, region)

Segmentation Based on Business Characteristics

• Firmographic segmentation divides organizations into segments based on characteristics such as industry, company size, location, technology, and performance
  • Industry segmentation focuses on grouping businesses based on their primary industry or sector (manufacturing, retail, healthcare)
  • Company size segmentation groups businesses based on metrics like number of employees, revenue, or market share (small, medium, large enterprises)
  • Location segmentation divides businesses based on their geographic location, which can impact factors like distribution, regulations, and cultural preferences (domestic, international, regional)
  • Technology segmentation groups businesses based on their adoption and use of specific technologies relevant to the product or service (cloud-based, on-premise, mobile-first)
  • Performance segmentation divides businesses based on financial metrics like profitability, growth rate, or credit rating (high-growth startups, established corporations)

Segmentation Strategies

Strategies Focused on Specific Segments

• Benefit segmentation is a form of behavioral segmentation that divides the market into segments according to the different benefits that consumers seek from the product or service (quality, performance, customer service)
• Niche marketing involves targeting a small, well-defined segment of the market that has a specific set of needs or preferences (luxury goods for affluent consumers, specialized equipment for a particular industry)
  • Niche markets are often underserved or have unique requirements that a specialized product or service can fulfill better than mainstream offerings
  • Niche marketing allows companies to differentiate themselves, charge premium prices, and build customer loyalty by catering to the specific needs of the segment

Strategies Covering Broad Markets

• Mass marketing, also known as undifferentiated marketing, involves marketing a product or service to a broad audience rather than a specific segment
  • The company uses a single marketing mix for the entire market, assuming that all consumers have similar needs and will respond to the same message (Coca-Cola's "Share a Coke" campaign)
  • Mass marketing is often used for products with wide appeal and low cost, where differentiation is less important than reaching a large number of potential customers
• Micromarketing is a marketing strategy that targets specific individuals or a small group of customers with personalized marketing messages and offerings
  • It involves collecting detailed data about individual customers' preferences, behaviors, and characteristics to create highly targeted campaigns (personalized email marketing, retargeting ads)
  • Micromarketing leverages advances in technology, data analytics, and digital channels to deliver one-to-one marketing experiences at scale