An Overview
Market research segmentation is the process of subdividing a large prospective market into smaller groups of consumers with like traits that produces similar needs. A market segment has three characteristics: it has homogenous needs, it is distinct from other groups, and it has a consistent reaction to a market.
The objective of segmentation is to increase a company's efficiency by channeling its marketing actions towards a group of consumers with similar characteristics in an effort to meet their needs. By knowing a segment's unique qualities, a company can predict where, when, how and to whom it will market its product or service.
Segmentation can be carried out based on these elements:
-     Demographics – a market within a certain age group, sex, educational level, occupation and income.
-     Psychographics – a market with similar psychological qualities, such as lifestyle, attitudes, values, fears, etc.
-     Behavioral – a market based on its usage of a product or service, and its frequency and amount of use.
To be credible, a market segment should possess the following characteristics:
-Â Â Â Â Â It has a population big enough to justify the marketing efforts and make a profit.
-Â Â Â Â Â It is a permanent type of segment and not likely to disappear.
-Â Â Â Â Â It can be reached through general marketing channels.
-     It is homogenous – the people in it have the same product quality preference.
-     It is distinct from other segments – the people in it need a unique marketing tactic.
-Â Â Â Â Â Its response to a market incentive is consistent.
The Advantages of Market Segmentation
 Steps to Segmentation
1. First, look at the total market of potential customers to your product. Then assess   which market segment you want to cater to. Then determine the methods you want to use to define your market. Choose from geographic, demographic, psychographic and behavior-based segmentation.
2. Then, analyze your chosen market segment for its potential profitability.
3. Collect and analyze data about your chosen market segment. Use primary and secondary research to gain information and get an overview of the market.
Done properly, market research segmentation will boost a company's growth, expansion and profits. Monitoring a specific segment will provide insights into how a customer base develops and changes with the times and can be a guiding factor in creating new and innovative strategies that a company can take.
Market research segmentation is the process of subdividing a large prospective market into smaller groups of consumers with like traits that produces similar needs. A market segment has three characteristics: it has homogenous needs, it is distinct from other groups, and it has a consistent reaction to a market.
The objective of segmentation is to increase a company's efficiency by channeling its marketing actions towards a group of consumers with similar characteristics in an effort to meet their needs. By knowing a segment's unique qualities, a company can predict where, when, how and to whom it will market its product or service.
Segmentation can be carried out based on these elements:
-     Demographics – a market within a certain age group, sex, educational level, occupation and income.
-     Psychographics – a market with similar psychological qualities, such as lifestyle, attitudes, values, fears, etc.
-     Behavioral – a market based on its usage of a product or service, and its frequency and amount of use.
To be credible, a market segment should possess the following characteristics:
-Â Â Â Â Â It has a population big enough to justify the marketing efforts and make a profit.
-Â Â Â Â Â It is a permanent type of segment and not likely to disappear.
-Â Â Â Â Â It can be reached through general marketing channels.
-     It is homogenous – the people in it have the same product quality preference.
-     It is distinct from other segments – the people in it need a unique marketing tactic.
-Â Â Â Â Â Its response to a market incentive is consistent.
The Advantages of Market Segmentation
- It gives a company focus and helps in creating more well-defined marketing strategies that are directed to a specific group.
- Advertising budgets become cost-efficient when a target segment has been defined since specific advertising will cost less than general ads. Â
- Customer satisfaction is easier to achieve for a market segment since it has generally the same wants and needs.
- It increases a company's competitiveness in that segment through brand recall, customer loyalty and a bigger market share.
- It determines the communication channels that can best connect with a specific segment.
- New related products can be developed that can fulfill future needs or create new ones for a market segment.
- Companies can make smarter and more informed business decisions by gaining insights into a specific market group.
 Steps to Segmentation
1. First, look at the total market of potential customers to your product. Then assess   which market segment you want to cater to. Then determine the methods you want to use to define your market. Choose from geographic, demographic, psychographic and behavior-based segmentation.
2. Then, analyze your chosen market segment for its potential profitability.
- Is the population large enough to justify marketing to them?
- Can you use normal communication methods to reach them?
- Will this segment still be present in the future?
- Will you have stiff competition over this segment from similar products?
- Are their needs realistic and aligned to your product or will you need a drastic shift to meet them?
- Is data about this segment available?
3. Collect and analyze data about your chosen market segment. Use primary and secondary research to gain information and get an overview of the market.
- Compare your company's data to industry-specific databases. Study shopping patterns and behavioral factors that affect purchase. Include the type of customer who buys a product like yours and how often they buy it, the decision makers in shopping and their locations.
- Make use of free or cheap syndicated reports that contain valuable and relevant information about market segments and get a deeper understanding of your segment's attitudes, values and lifestyles.
- Based on the data gathered, define a segment that has key similarities. Plan your sales and promotional strategies around them.
Done properly, market research segmentation will boost a company's growth, expansion and profits. Monitoring a specific segment will provide insights into how a customer base develops and changes with the times and can be a guiding factor in creating new and innovative strategies that a company can take.
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