MARKET SEGMENTATION

Definition and Concept

 (1) Market Segmentation,

 (2) Market Targeting,

 (3) Market Positioning.

 commonly known as STP - in short (Segmenting, Targeting and Positioning)

DEFINITION OF MARKET SEGMENTATION

According to  Philip Kotler: "Market Segmentation is the sub-dividing of a market into homogeneous subsets of customers, where any subset may conceivably be selected on a market target to be reached with a distinct marketing mix."

Features of market segmentation

• It must be identifiable

• It must be durable

• It must be profitable

• It must be accessible

• It must be optimum in size

Importance of market segmentation 

- Knowledge of marketing opportunities

- Increase in sales volume

- Benefits to customers

- Proper allocation of resources

- Enhances marketing efficiency

STEPS IN MARKET SEGMENTATION

1. Identify the target market.

2. Identify expectations of Target Audience.

3. Create Subgroups.

4. Name your market segment.

5. Marketing Strategies.

6. Review the behaviour.

7. Size of the Target Market.

Types of Marketing Segmentation

1. Geographic segmentation: Segmentation on the basis of geographical units such as nations, regions, states, etc.

2. Demographic segmentation: Segmentation on the basis of age, sex, income, family size, expenditure patterns, education, etc.

3. Psychographic segmentation: Segmentation on the basis of lifestyle, personality traits, social class, etc.

4. Behavioural segmentation: Segmentation on the basis of consumers buying behaviour such as consumers' usage rate, usage type, benefits sought from the product, brand loyalty, usage occasions, etc.

Advantage of segmentation

-  Helps distinguish one customer group from another within a given market. 

-  Facilitates proper choice of target market.

- Facilitates effective tapping of the market.

- Know your Customer Better

- Retention of Customer

- Provides Market Opportunities

Limitations of segmentation

- "Too small" segments

- Firms compete in too many segments

- Slow to seek innovative possibilities

- Unable to use certain media

- Misread differences and similarities

Properties of an effective segment

1. Measurable

2. Accessible

3. Servable

4. Growing

5. Profitable

6. Appropriate size