MARKET SEGMENTATION NEEDS
:-Better matching of customer needs
Customer needs differ. Creating separate offers for each segment makes sense andprovides customers with a better solution.
Enhanced profits for business -
Customers have different disposable income. They are, therefore, different in how sensitivethey are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits.
Better opportunities for growth -
Market segmentation can build sales. For example, customers can be encouraged totrade-up after being introduced to a particular product with an introductory, lower-priced product
Retain more customers -
Customer circumstances change, for example they grow older, form families, change jobs or getpromoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life(life-cycle), a business can retain customers who might otherwise switch to competing products and brands
Target marketing communications -
Businesses need to deliver their marketing message to a relevant customer audience. If the target market is too broad, there is a strong risk that(1) the key customers are missed and(2) the cost of communicating to customers becomes too high / unprofitable. By segmenting markets, the target customercan be reached more often and at lower cost
Gain share of the market segment -
Unless a business has a strong or leading share of a market, it is unlikely to bemaximizing its profitability. Minor brands suffer from lack of scale economies in production and marketing, pressures fromdistributors and limited space on the shelves.
MARKET SEGMENTATION STRATEGIES:-
arket Segmentation Strategies
how a market is segmented is based on variables used for segmentation; behavioral, demographic, psychographic andgeographical differences.
: Behavioral segmentation is based on the customer's needs and subsequent reaction to thoseneeds or toward the purchase of intended products and/or services. This study is conducted on all variables that are closelyrelated to the product itself, like loyalty to a particular brand, cost effectiveness in terms of benefits and usage, circumstancesresponsible for the purchase, whether the customer is a regular, a first timer or and has the potential to become a customer,and whether the readiness to buy is linked to status.
: Demographic segmentation refers to a wide study of the potential customers.While marketing a product many variables like age, gender, education, income, size of the family, occupation, socioeconomicstatus, culture and religion, language and nationality are taken into account. There are many instances where such asegmentation has worked very profitably, toys and clothes for every age group, certain food products that do well in certaincounties and don't in some, either due to cultural or religious reasons. Demographic segmentation plays a vital role indetermining whether a product can be mass marketed or designed for specific clientèle.
: Segmenting people according to their lifestyles and values, and how they translate intoconsumption or purchases of products of services is what psychographic segmentation is all about. How one's interest,opinions, values, attitude and the activities they perform, all affects how and why a group of people would lean towards oneproduct more than others. A high status would translate into an expensive flying habit, while a thrift value will translate intoan economy flight.