4 Types Of Market segmentation
Segmenting market means dividing the whole market into segments or groups to be specifically targeted based on the shared characteristics of the consumers constituting the market. The consumers could be potential or existing.
The common ways of segmenting market by researchers is to divide it on the basis of needs, interests and lifestyles. Though in business to business (B2B), the sellers would segment on base of various countries or businesses.
The sellers of business to consumers (B2C) would divide on basis of meaningful categories such as lifestyle, behavior and demographic categories. The real purpose of market segmentation is more insightful than increasing of purchases while targeting the key segments. It is to understand the needs and affordability of each market and then position products and services according to the requirements of these segments differently.
Market segmentation is one of the steps of the strategy of good decision making of marketing. STP (usually stands for standard temperature and pressure) in marketing stands for segmentation, targeting and positioning.
In targeting; a step after segmentation, a group or two segments are chosen among the different segments of market to be targeted. Then all the focus is given to that segment. While in positioning step, the products and services are made according to the needs and interests of that particular segment.
So, here we see that in this whole process, segmentation is an important and initial step without which the others two cannot be done and the results would be unachievable.
Though B2B and B2C, both uses different ways of segmentation, generally the common four types of segments in a market are;
It is the segmentation of market on the basis of regions or geographic boundaries. Different areas are set by different norms and values. Like in Muslim countries the selling and consumption of non halal products like wine and pork is consider bad while in European countries there is no restriction over the use of such products. Likewise, in colder areas the products like light clothes are not preferable while light clothing is suitable for warmer areas.
On situations like these, marketers must focus on the norms and traditions, seasons and other characteristics of the specified segment and design the products accordingly so this kind of segmentation is geographic segmentation.
It is the division of market on the basis of different variables. These variables include age, gender, occupation, education level, income, family size and others. Generally this type of segmentation is mostly used by marketers as it more specifically define the needs of the selected segments and the product marketing becomes easier.
Age is the most common factor of demographic segmentation. Different age groups leads to different needs and interests and so different companies focus on a particular segment of age. For example, the brand Minnie Minors targets the children, some brands targets teenagers, some target adults and others targets aged.
The opposing gender leads to opposing needs and interests. By the study of demographics, different preferences of males and females were noticed. In terms of entertainment, males prefer wrestling matches, action movies etc. while in case of females, they like watching daily soaps, modeling shows etc. in terms of sports, males prefer cricket, football etc. while badminton is found preferable by females. Apart from entertainment, the needs of males and females vary like that of clothing.
Different occupations leads to different needs and requirements. Occupation plays a great role in the purchasing of products and services. A white collar person would has different set of requirements than a landlord.
Education level, income and family size also leads to different type of buying in different people.
The division of market on the basis of the intrinsic traits of the consumers. Different people held different values, personalities, attitudes, lifestyles and opinions. Everyone has a different personality and requires things that compliment his personality. Same goes with lifestyle, attitude, values etc.
For person of a high status, he has a lavish lifestyle as compared to the one who belongs to a middle class status in a society. A religious person has a different set of requirements than that of a not-so-religious one.
Such differences need to be focused and the marketers need methods like surveys, case studies, focus groups, interviews etc to get this data.
It is the type of segmentation that focuses on the reactions of customers to the marketing and promotions strategies. Their attitudes, decision making and buying processes are the key elements to be focuses by the marketers to understand their behavior.
Often it happens that a person has no intentions to buy a product but fall prey to marketing techniques and buy that product and a person with full intentions to buy a specific product drops his motive because of certain factor that changes his mood. Marketers must be vary of such factors and act in accordance with them instantly.
Apart from the common four types of market segments there are other approaches used by marketers in terms of segmentation.
- Undifferentiated approach
- Focus approach
- Differentiated approach
- Hyper segmentation
In this approach, the products are produced by mass production. No segments are made in the market but the products made fulfil the requirement of a large number of buyers.
Here, only a small defined portion of market is focused and targeted.
In this approach, the products are produced by mass customization. Market is divided and further divided into segments to be targeted and specified products are made.
Here, the marketing strategy is one-to-one. Products are specified for specific persons individually.
In the segmentation of market, the marketers must consider the following specifications;
- Criteria for segmentation
- Numbers of markets to be segmented
- Worthiness of different markets to be segmented.
The segmentation of markets started even before it came to the acknowledgement of the marketers and it is expected to continue as it leads to many advantages to the marketers especially when market segmentation is done ahead of the competitors as to get the competitive advantage.