Market segmentation is a marketing process by which a company divides a large market into smaller groups for members with similarities or certain characteristics in common.
Once the target audience has been divided, it will be easier to develop a more effective marketing strategy for each group in question. In this way, effort and work are focused, reducing the cost, compared to a campaign focused on a larger and more heterogeneous audience. In addition, the result is usually faster and more satisfactory.
Objective of market segmentation
The market segmentation strategy seeks that companies know well the characteristics of people when consuming a product or service. So that this allows them to offer them what they really need. They are therefore trying to get companies to focus on a few target markets rather than trying to target all of them. Thus achieving a competitive advantage in a specific segment.
It is a strategy often used for small businesses, since they usually do not have the necessary resources to attract the entire public. Although not necessarily, since sometimes the competition is so great that large companies also specialize in a market segment. Companies that use this method often focus on the customer's needs and how the products or services could improve their daily lives. Also, some companies may allow consumers to participate in their product or service.
Market segmentation criteria
How companies or other types of organizations segment can depend on variables as disparate as tastes, fashions, styles, personality types, geographic location, or level of wealth.
Taking into account this high number of criteria, companies seek to know the behavior of people when consuming a product or service. This being the case, the next step will be to classify individuals into audience segments that have the most similar response possible to the product offered. A classification of the main types of market segmentation could be the following:
- Demographic characteristics: Which could focus on details such as age, social class, gender, culture or religion.
- Geographical area: It answers questions such as what region you are from, in which areas you buy the products, what is your country of residence or the relief of the place where you live.
- Consumer behavior: It falls on the idea of the end of the consumer, that is, knowing why they buy and what they are looking for when they want something. For example, you can search for efficiency, value for money or for the image you project to others.
- Psychological traits: Refers to tastes, fashions, styles, character.
- Economic factors: job, job stability or income level.
Therefore, knowing with great precision the details and behaviors of each segment will be a basic element when developing an effective marketing mix to sell efficiently. In other words, it will be vital to be clear that the product in question is created and aimed at a certain part of the consumer population.
Employing segmentation helps to reliably measure the effort and optimization of resources devoted to a project.
Market segmentation example
It may seem obvious, for example, that if I own a brand of guitar accessories, it would not be very smart to put advertisements on all televisions and in prime time. What could we do? Locate individuals who are potentially going to use my product. For example, of course, people interested in music. It will be much more effective to advertise in music magazines, musical instrument stores, and related sites.
Just as the previous example may seem overly basic and logical, don't forget that segmentation is a basic marketing process for businesses. In other words, it will also be necessary to take into account essential factors such as profitability. Since the segment must be large enough to make a profit or be located in locations that the company is able to supply.Target market