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Market segmentation is the science divide the overall market into subsets of customers or segments, the segments have the same characteristics and needs. The segmentation typically involves a considerable market research and thus can be expensive. This is done primarily in large companies with highly diverse product lines or serve a large market. Small businesses tend to be segments that it serves best by trial and error, to stocking deal with customers and product more and more suitable for a specific customer.
Segmentation is somewhere near the middle of the continuum of marketing strategies that is of sufficient mass marketing where the products for all customers in the marketing where various products are specially designed for example for each customer (surgery market-one-to-one offered plastic). Most companies realize that since no two people are exactly alike, unlikely that it is able to use a single product please all customers in the market. They also recognize that it is hardly possible to create different products for every customer. Instead, most companies are trying to improve their chances to win a large number of customers by dividing the total market into segments, then try to fit the product and marketing mix them closer to the needs of one or more segments. A number of characteristics of the customers, since segmentation is known base can be used to determine market segments. Some basics are often used are age, gender, income, geographic region, and buying behavior.
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Marketing Strategy
Although the mass marketing (also known as aggregation market or differentiated marketing called) can not fully meet each customer on the market, many companies are still using this strategy. It is generally in the marketing of goods and services, including sugar, gasoline, rubber bands, or a chemical cleaning standards, when a large number of people have the same needs and the products or services it as largely the same, used regardless of the provider , Mass marketing has several advantages for businesses, such as the production and marketing costs. Due to the efficiency of large-scale series and individual marketing program, the business mass market goods or services they might be able to provide consumers with more value for their money.
Some manufacturers use a mass-market goods marketing strategy to announce as product differentiation see their rates different from competitors, even if the products are largely the same. For example, a manufacturer brand names could embroider towel on the towel and sold only through upscale department stores as a form of product differentiation. The consumer may tend to think of this cloth as somehow better than other brands, and therefore the premium price is worth. But changing perception of consumers in this way can be very expensive in terms of the promotion and packaging. A product differentiation strategy is most likely to be effective if consumers care about the product and identify any differences between the brands.
Although the mass market offers cost advantages for companies, this strategy has its drawbacks. A single product offering can not fully meet the diverse needs of all consumers in the market, and consumers satisfied with the needs expose your business to a challenge by a competitor who, it can be seen in the situation and satisfy customers more accurate needs. In fact, the market for new products generally begins with a competitor that provides a single product, then gradually fragmented into segments as a competitor in the market with products and marketing messages to consumer groups targeted, the original manufacturer missed. These new competitors enter the market, as controlled by established competitors, because they recognize and meet the needs of customer segments meet. Lately, the proliferation of computerized customer database has partnered to promote the marketing of ever more-tightly focused market segments.
Applying market segmentation strategies are most effective when the overall market consists of many smaller segments, whose members have the same characteristics or particular needs. The segmentation of the companies it may share in several markets as a homogenous group, and developing products and marketing programs separately in more detail the needs of one or more segments correspond. While this approach can have significant benefits for consumers and profitable sales volume (not maximum sales volume) to provide for companies that can be expensive to implement it. B. Identification homogeneous market segments require a large number of market research, which can be costly. Companies can also increase production costs because they lose the efficiency of mass production, in the interests of small series, to meet the needs of a subset of the market. Finally, to find a company that has been selling products for a segment develops engage in the sale of other products for other segments provided. Nevertheless, market segmentation is critical to success in many industries where consumers have diverse and specific needs, such as construction, upholstery and sewing.
Segmentation bases
To implement successful market segmentation strategy should be used Company market research techniques to find patterns of similarity between the preferences of consumers in the market. Ideally, customer requests will fall into different groups based on characteristics of the identified population. That is, if a customer were represented on a graph having certain properties or basic segmentation, along the axis, the points will tend to form clusters.
In marketing jargon, a customer segment should be measured by the obvious characteristics; they must be large enough to establish a market; must reach them easy to guess (they all watch American Idol, for example, or subscribe to one of four magazines); allegedly in response to marketing; Segment should not even be stable over time and aggregation.
Determining how the segmentation of the market is one of the most important issues that needs to provide marketers. Creative and effective market segmentation can lead to the development of new popular products; successful segmentation can consume a lot of dollars and produced nothing. There are three main types of segmentation basis to consider for companies, descriptive, behavioral and support their services are located in different properties of potential customers.
Descriptive basis for market segmentation between the various factors that describe the demographic and geographical location of customers in the market. They are the basis of the segmentation of the most commonly used because they are easy to measure, and because they often serve as a strong indicator of the needs and preferences of consumers. Some demographic variables can be used as a descriptive basis in market segmentation, are age, sex, religion, income and family size, while some variables may include the geographical area of the country, the climate and the inhabitants of the surrounding area.
Behavioral basis for market segmentation generally more difficult to measure as a descriptive basis, but they are often as powerful factor for consumer purchases. This includes the underlying factors that motivate consumer purchase decisions that will help to make such personality, lifestyle and social classes. Bases behavior also includes factors that are directly related to the acquisition of certain consumer goods, such as the degree of brand loyalty, the degree to which they use the product and should replace them, and their willingness to buy at a given moment.
The business market segment based on the benefits hoped identify the main benefits that consumers for the purchase of a particular product, then deliver products that offer benefits to search. This segmentation approach is based on the idea that it is because consumers are looking for market segments mainly used for various benefits of the product, not because of other differences between consumers. One of the potential pitfalls of this approach is that consumers do not always know or meet the purchasing decisions do not always identify the only benefits that affect them. Many marketers use a combination of a base, the best suited when the market segmentation seems to be. The use of a single variable is certainly easier, but often to be less to be exact.
The segmentation method
The process itself begins with the contraction of the universe, to examined in a particular market will now be served by the company and basic information about competing products or services that get offered now. Once this step is completed to detect variables, checked and tested. At the level of basic variables, such as it may be. To the income and demographic characteristics of consumers
With the completion of this preparation, market research is actually to collect and analyze data to set to the selected wide body of consumers. Analysis of the data will begin to categorize customers into different groups based on variables. Additional analysis may include further research, will continue to be carried out, in order to develop a detailed profile of the individual segments were identified.
If the correct variables in the first and competent market research selected carried out, leading to grouping will have quite different characteristics, and quite well documented, so the company one or more segments that will be the easiest and most profitable to use to choose. Strategy itself, the company play a role. The goal, for example, its capacity to take full advantage of more, and the company is therefore the segments, buy the largest volume select; Alternative SPV can reduce the level of production with high profits, which leads to focus on other segments.
The last stage of the segmentation process will be the development of products and marketing plan based on the segment (s) most likely to fit the "ideal" situation of the company.
In general, the customers are willing to pay a premium for products that pay their needs more specific than competitors justice. So marketers successful overall market and adapt their products to the needs of one or more smaller segments stand to gain in terms of increased profit margins and reduce competitive pressure. Small businesses, in particular, market segmentation can in making them compete with key large enterprises. Many companies offer a management consultant with the help of market segmentation for small businesses. However, should the potential benefits of market segmentation provided against the cost can be measured, which-in addition to the necessary market research for market segments, perhaps a cover increased costs of production and marketing.