Question

You have been a contributing author to several marketing newsletters, and you have been asked to submit a one-page article on market segmentation. First describe the need for market segmentation and then, in turn, discuss the various approaches marketers can take, including the advantages of each approach. i.e. Demographic, Geographic, Pyschographic, and Behavior Segmentation

Answer 1

Not all individuals have similar needs. A male and a female would have varied interests and liking towards different products. A kid would not require something which an adult needs. A school kid would have a different requirement than an office goer. Market Segmentation helps the marketers to bring together individuals with similar choices and interests on a common platform.

• Market Segmentation helps the marketers to devise appropriate marketing strategies and promotional schemes according to the tastes of the individuals of a particular market segment. A male model would look out of place in an advertisement promoting female products. The marketers must be able to relate their products to the target segments.
• Market segmentation helps the marketers to understand the needs of the target audience and adopt specific marketing plans accordingly. Organizations can adopt a more focussed approach as a result of market segmentation.
• Market segmentation also gives the customers a clear view of what to buy and what not to buy. A Rado or Omega watch would have no takers amongst the lower income group as they cater to the premium segment. College students seldom go to a Zodiac or Van Heusen store as the merchandise offered by these stores are meant mostly for the professionals. Individuals from the lower income group never use a Blackberry. In simpler words, the segmentation process goes a long way in influencing the buying decision of the consumers.

An individual with low income would obviously prefer a Nano or Alto instead of Mercedes or BMW.

• Market segmentation helps the organizations to target the right product to the right customers at the right time. Geographical segmentation classifies consumers according to their locations. A grocery store in colder states of the country would stock coffee all through the year as compared to places which have defined winter and summer seasons.
• Segmentation helps the organizations to know and understand their customers better. Organizations can now reach a wider audience and promote their products more effectively. It helps the organizations to concentrate their hard work on the target audience and get suitable results.

Demographic- Demographic segmentation is very simple to apply and use, as government statistical data is readily available in most countries

Suitable data can be obtained quite quickly and cheaply

As segmenting by demographics is also easy for everybody to understand, from management, to sales and customer service staff, it can be more easily built into an internal marketing plan

Geographic- This is quite a valuable approach for a large company that operates across many countries, as geographic segmentation would allow them to consider cultural differences

It is also quite an effective approach for small firms, with limited resources that often need to operate in a defined geographic area for efficiency purposes.

Also tends to work well in cities/countries where there are significant differences in socio-economic status in different geographic areas, or where there is significant changes in lifestyle across regions.

Psychographic- Psychographic segmentation gives a much better insight into the consumer as a person, which more likely lead to the identification of underlying needs and motives

As a result, psychographic segmentation should deliver a much better understanding of the consumer, which in turn which should create more valid and responsive segments and subsequent marketing programs.

Behavioral- This style of segmentation is often used in mature markets, where the firm is looking to understand: how to activate a non-user, target switchers, convert a medium user to a heavy user and so on