2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Market segmentation is the process of dividing the market (consumers) into groups according to certain characteristics. The main purpose of this action is to study the reaction of a particular group to a particular product, as well as the choice of the target (main) market segment. Market segmentation dominates any marketing research of a company's customer base.
Why do we need market segmentation
Any company works for its customers. Naturally, they all differ in one way or another from each other. Market segmentation is the process of highlighting certain parameters that distinguish one group from another. One buyer from another can be distinguished by his place of residence, habits, social status, religious views and even attitude to life. Taking into account all these differences, the company can produce different products for each segment. Each group is naturally different from each other. One of the differences is their number. Many firmsconcentrate their attention only on the largest group. Although there are many companies that focus on one narrow segment. This allows them to avoid a lot of competition and have regular customers. Segmentation gives you the opportunity to study your customers better, as well as identify which groups do not use the services of a particular company. Thus, market segmentation is an integral part of the activities of any company. This phenomenon is based on certain principles.
Principles of market segmentation
Segments may differ according to several criteria:
- Geographically. Consumers can be divided into urban and rural populations, as well as by place of residence - by regions, cities and even countries.
- Demographically. The most common is the division of potential customers by age, income level and marital status. Extras include religion and occupation.
- On a psychographic basis. The division of consumers is carried out on the basis of the characteristics of a particular person. There are various methods for determining the psychographic type of a person, according to which the market is segmented. Example: a person can be attributed to one of two groups - psychocentric or allocentric.
Among other signs, consumers can be distinguished by their attitude to products, by consumption style and by personal characteristics.
How to select segments
Choose oneor another product can be affected not only by one age of consumers, but also, for example, by income level or geographical location. Therefore, the more criteria will be allocated when studying consumers, the more clearly the whole situation on the market will be visible. At the same time, a large number of signs significantly complicates the situation. Simply put, the more segments, the fewer consumers in each group. How many segments to allocate and by what parameters depends on the individual characteristics of the enterprise.
Thus, market segmentation is a process that must follow a certain pattern, depending on the goals of the enterprise.
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