Buyers in any market can be identified separately based on their needs, wants, preferences, resources, geographical locations, and purchasing power. Through Market segmentation, the large market is divided into smaller, more manageable segments where the organizations can analyze and reach more efficiently and effectively. The organizations can select one or more market segments based on their capacity to distribute. However, the market segmentation is done to address the unique needs of the customers and to make it easy for the organizations to make their strategic planning decisions.
Market Segmentation can be identified under four main variables.
- Geographic Segmentation
- Demographic Segmentation
- Psychographic Segmentation
- Behavioral Segmentation
Geographic segmentation states the division of the market into small units based on geographical areas. This can be identified as nations, countries, regions, states or provinces. An organization can decide to operate in one or more geographical areas. But the organization might have to localize its product or services to satisfy the unique needs for the particular geographical area. The organization should identify the unique need for the geographical area and customize their product to address the unique need. The promotional and advertising methods can also be different from one geographical area to another.
Demographic Segmentation divides the market into smaller segments based on age, gender, income, occupation, generation, religion, ethnicity and education. Many other factors can be considered in the demographic segmentation. This is the most popular way of market segmentation. Under demographic segmentation, the organization has to identify which demographic segment they are trying to attract for the product. They can decide the segment based on the specification of the product.
The advertising method also should be decided based on the demographic segmentation as the preferable marketing method can differ from one segment to another. Especially when advertising based on the generation or the age, the marketers have to find the most attractive ways to reach to the customers.
Income segmentation is most important when selling products with a higher value. When selling these kinds of products, marketers mostly use the personal selling method.
Psychographic segmentation is about dividing the market based on the social class, personal characteristics, and lifestyle of the customer. It is important to understand that the people in the same demographic segment can have different psychographic preferences. Due to this, psychographic segmentation can be a little complicated than the demographic segmentation.
This is mostly used in selling products with high value such as the automobile or home furnishings. Certain customers are willing to purchase products because it shows their social class and income level. The marketing methods to use in that kind of scenario are different than the usual selling and marketing methods.
Behavioral segmentation is about dividing the market into segments based on the knowledge, attitudes, uses, occasion, benefits or responses concerning a product. Most of the marketers believe that behavioral variables are the best point to start in building market segments.
This is one of the most suitable segmentation. But this can create practical difficulties when providing for a large marketing segment. The advertising methods that need to be used also should be different from each person to person and this is not advisable to use in mass-scale production.
Mentioned above are the four variables of the Market segmentation. It helps the organization to identify the ideal market segment for their products. Apart from that, it helps the marketers to identify the best marketing method based on the market segment which can attract the customers as much as possible.
In addition to that, the organization can localize or improve their product if it is planning to serve more than one market segment.
05 stages of the Buyer decision process