About Segmenting Consumer Markets
The segmentation of consumer markets occurs when companies try to place consumers into specific categories to determine who is most likely to purchase their products. Market segmentation allows companies to develop promotional campaigns that appeal to these specific segments as opposed to painting all consumers with a broad brush. Effective market segmentation can result in the most efficient use of precious advertising dollars.
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Significance
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Without market segmentation, companies are required to take a "one size fits all" approach known as mass marketing. As a result, they may be wasting valuable time and money spreading their message to those who have no need for or interest in their products and services. This approach also can make companies vulnerable to losing existing customers to competitors' marketing efforts that target the customers' specific needs.
Benefits
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In contrast with mass marketing, market segmentation allows companies to target consumers who have an actual interest in their products. For example, a Christian bookstore that chooses to advertise on a radio station with a religious format or during a religious television program can easily target listeners and viewers who are more likely to benefit from its products.
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Types of Needs
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Market segmentation requires companies to assess the type of need their product satisfies, which helps determine the overall marketing direction. Possible needs include the fulfillment of social esteem or pleasure, such as the status that comes with the purchase of a luxury automobile. A need can also be functional in nature, such as a food product or one that facilitates household chores.
Characteristics
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There are several characteristics of market segmentation. Demographics breaks consumers into categories such as age, gender, occupation and income level. Geographic segmentation pinpoint consumers based on where they live. Psychographics looks at factors such as consumer opinions, values and attitudes. Behavioralistic segmentation explores factors that encourage consumer purchasing such as brand loyalty and impulse buying.
Function
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Companies use information gleaned from market segmentation research to develop marketing and promotional campaigns. For example, if the research indicates that a product appeals to the 18- to 35-year-old demographic, the company will develop advertising that appeals to a younger audience. If a product lends itself to high impulse purchasing, the company will attempt to persuade merchants to locate the product near the store's registers.
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References
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