Market segmentation is one of the most effective tools for marketers to be able to reach their target group, making it easier for them to personalize their campaigns, focus on what needs to be done and group similar customers to target a specific contact in a profitable and cost-effective way. Market segmentation was used by marketers in the late 1900s and is critical to the formation of any marketing program.
Defining market segmentation
Market segmentation is the process of dividing potential market customers into different groups and segments based on specific characteristics. Members of these groups have similar characteristics, and there is usually one or more commonalities between them. In other words; this is the process of dividing the total consumer market into smaller groups of people with similar characteristics. Ultimately, people in each department should be as similar as possible, but they should also be distinguished from other departments. The goal is to create market segments that purchase similar products for similar reasons, respond similarly to brand messages, have similar capabilities to purchase products, and so on. For example, the segmentation of different classes of airline services is into economy class, business, and first-class. There are many reasons why the market is divided; One of the main reasons for marketers to segment the market is that they can create a combination of custom marketing for each segment and meet the needs based on them.
The purpose of segmentation is for a company to focus on sub-segments or parts of the market in order to gain a competitive advantage within the segment. Focusing on a particular company is essentially the whole nature of a marketing strategy. Market segmentation is a conceptual tool to help achieve organizational goals. The concept of market segmentation was coined by Wendell R. Smith in his 1956 paper, Product Separation, and Market Segmentation as an Alternative Marketing Strategy.
Market segmentation is typically developed using a variety of features, which are discussed further below. These characteristics include demographic, psychological, behavioral, and geographical characteristics.
Geographical segmentation divides the market by geography. This type of segmentation is an important market for marketers, as people from different regions may have different needs; For example, a company may choose to sell its own brand in some countries and not in others.
Many restaurants offer their service in a geographical area and focus on making more profit. People from different regions may have different reasons for using a similar product.
Geographical segmentation helps marketers provide specific marketing campaigns for each person. Heating products may be marketed in cold cities or countries to sell their product. Some common examples of geographical divisions are hot areas or cold, urban or rural areas, wetlands or dry areas, and so on.
The demographic division of the market is based on demographic variables such as age, gender, marital status, family number, income, religion, race, occupation, nationality, and so on. This segmentation is one of the most common divisions among marketers. Demographic divisions are seen in almost every industry, such as automobiles, beauty products, cell phones, clothing, etc., and it is assumed that customer buying behavior is strongly influenced by demographic characteristics. Some brands target only women and some brands target only men. Hearing aids are intended for the elderly and people with hearing impairments. Another example is in the car market, where there are different price ranges for manufactured cars, in which case market segmentation is based on the economic situation of consumers. Demographic segmentation always plays a vital role in the overall segmentation strategy.
The market is also divided according to the behavior of the contact, how to use, priority, decision model. Sections are usually divided based on their knowledge of the product or how to use the product. It is believed that knowing and using a product affects a person’s decision to buy. Contacts can be divided into the following sections:
- People who know about the product;
- People who don’t know about the product;
- Former users;
- Current users;
- Potential users;
People can be categorized as loyal to the brand, neutral to the brand, and competitor of the brand. They can also be divided according to how they are used. An example of market segmentation based on behavior is related to occasional marketing. Shopping patterns in the last days of the year are completely different from shopping patterns in normal days of the year; Therefore, segmentation of how to use is also a type of behavioral segmentation.
Psychological segmentation divides contacts based on personality, lifestyle, emotions, behavior, and attitudes. The process of this segmentation is based on the assumption that consumers’ purchase behavior can be influenced by their personality and lifestyle. Personality is a combination of traits that make up a person’s distinctive nature and include habits, traits, attitudes, moods, and so on.
Lifestyle is how a person lives their life. A person’s personality and lifestyle greatly influence a person’s decision to purchase and behave. A person with an extravagant lifestyle may consider having air conditioning in each room as a necessity; While a person living in the same city has a conservative lifestyle, this may seem luxurious. Psychological segmentation is a legal way to divide the consumer market. We can simply say that the psychological segmentation of market division is based on social or cultural class, lifestyle, or personality traits of different customers.
Because buyers behave very differently, and not every company is able to be present in all segments of the market, so any business that wants to be more effective in its work must pay enough attention to market segmentation to pay attention to act on the type of product and service in the market to be able to achieve your desired profitability. Therefore, market segmentation is of particular importance; This is because it makes customers better aware of their demands, offers products that appeal to each market, gains more customer satisfaction, and makes marketing more efficient.