Market segmentation a term heavily weighted and used in marketing, is the division of the people into groups on the basis of the common characteristics they possess and share which ultimately leads to common interests and demand for product and services.
Types of market segments
Demographic Segmentation: age, gender, occupation, ethnicity etc
Psychographic Segmentation: interests, activities, mindsets, values etc
Behavioral Segmentation: willingness to purchase, response to price changes, usage rate etc
Geographic Segmentation: region, climatic conditions, population size etc.
Example
Every segment has its own distinct features separating it from other market segments. For example, demographic segmentation is based on the characteristics such as age, income bracket, gender, ethical grounds, family size, education, generation etc where as geographic segmentation involves division and grouping of people on the basis of the place they live in. it’s basically location based segmentation.
The market segment possesses somewhat similarity in the needs, wants and demands of the people in it due to the reason that they share some common traits. This feature of market segment helps the marketer design its marketing strategy efficiently.
Features Essential for Market Segments
A market segment must have the following features in it:
1-Durability: a market segment must have longevity; it should not be short lived.
2-Consistency: it should be consistent and reliable to some extent.
3-Distinctive: it must be different from other market segments on some grounds.
4-Reachable: a market segment must be of such a type that it could be easily accessed.
Advantages of Market Segmentation
Out of many advantages of market segmentation some are as follows:
1-Customer retention: it helps a company to take measures in order to retain its customers.
2-Increased rate of returns: ultimately the company gets profitable returns if it has done segmentation accurately.
3-Customer satisfaction: by delivering desirable goods satisfaction is achieved.
4-Brand loyalty: loyalty and affinity gets a boost as a result of successful marketing resulting from selection of appropriate market segment.
References
Michel Wedel, Wagner Antonio Kamakura (2000), "Market segmentation: conceptual and methodological foundations", Springer, pg 382