Market segmentation indicates the division of an existing market into different sub-markets with different attributes to satisfy the respective customers in the best possible manner. For different types of market segments, the marketing plan and strategy will be different considering different attributes.
For a firm offering retirement solutions and planning, to market its product it will first divide the overall market into different segments based on age. After that it will target only the market segment of middle and old age professionals to make its marketing plan most effective and successful.
Proper market segmentation makes a marketing plan very effective and successful as it caters to only a specific set of requirements and demands of the customer. It also reduces the marketing cost significantly.
Main market segment selection criteria
Any market segment should have the following attributed to be selected as a market segment
A large market can be segmentation by various factors depending on the marketing needs and products. Market for industrial products, FMCG products, Luxury products, Cars etc. are divided based on different attributes and it varies from product to product. We will try to find out the basis of different market segmentations based on different parameters.
Normal Consumer based market
Normal consumer based market mainly indicates the wide market for normal consumers especially for FMCG products. The main parameters used for Consumer market segmentation are
1) Geographic Segmentation: Region, Population Density, Growth rate, Weather
2) Demographic Segmentation: Age, Gender, Education level, Profession, Literacy Rate, and Culture
3) Psychographic Segmentation: Values, Ethics and lifestyle
4) Behavioral Segmentation: Using Patterns, Brand Loyalty and Consumer Behavior
Marketing research can be used to identify the patterns and consumer behavior in a market place. It also helps to put a customer in a specific market segment based on his behavior and preference.
Business Market Segmentation
It is almost same as the normal consumer market expect some business oriented differences which make it a bit different from the consumer market segmentation. This is mainly used to B2B or Business-2-Business marketing. The main parameters of Business market segmentations are
1) Geographic Segmentation: Location, Respective Industry growth rate, Business Concentration, Economic factors etc.
2) Customer Type: Business Size, Industry Position, Market Position, Maturity etc.
3) Behavior: Loyalty, Usage Patterns, Order patterns, Commitment level, Timely Payment etc.
Market Segmentations makes it very useful for the marketers to offer the marketing mix to the appropriate market segment; thus increasing the success rate of the same.
Levels of Market Segmentation refers how a marketer uses different market segments for the marketing purposes and to increase the company’s targeting consumer base.