Market segmentation is a process where a market is divided ino potential customers/groups/segments, based on different characteristics.
The segments contain consumers who respond similarly to a marketing strategy. Therefore, the consumers in a segment have to share similar traits, interests, needs or locations.
Market segmentation is very important for marketers. Because of the better understanding of a segment, marketeers can personalize their marketing campaigns.
It is also more efficient. Through segmentation, marketers can target a whole group, instead of induviduals. This saves time, money and other resources. Grouping similar consumers together allows marketers to target specific audiences in a cost effective way.
Segmentation can also reduce the risk of an unsuccessful marketing campaign. With the information that marketers achieve through segmentation, strategies can be formed more efficiently and there is a higher chance of succes than if it was a generic campaign that was implemented across all the segments.
Segmentations also helps marketers prioritize certain target audiences. If it shows through segmentation that some consumers would be more likely to buy a product, than marketers know where to put their attention and resources into.
It is not only important for companies to do market segmentation, it is also important to do it right. These four factors can affect the segmentation and are very important to check:
- Clear identification of the segment
- measurability of its effective size
- accessibility through promotional efforts
- appropriateness to the policies and resources of the company
- Demographic: very popular, mostly used to thet the right population in using their products. Takes factors such as age, gender, family size, income, occupation, religion, race and nationality into account
- Behavioral: Divides the population on the basis of their behavior, usage and decision pattern.
- Psychographic: This type of segmentation takes factors such as lifestyle, activities, interests and opinions into account
- Geographic: This type of segmentation divides people on the basis of geography. People in different locations have different needs.