What is market segmentation process?
The segmentation process essentially involves grouping and sub-grouping large homogenous markets into clearly identifiable segments. The division is made on the basis of similarities in needs, wants, or demand characteristics. The market segmentation process also helps companies concentrate their marketing energy on various pre-defined market segments to gain a competitive advantage within that particular segment. Furthermore, marketers can easily personalize their marketing campaigns with this approach. It also reduces the risk of an unsuccessful or ineffective marketing campaign. Companies must choose the right type of market segmentation process that would best suit their marketing goals.
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Types of market segmentation
Geographic segmentation
This is one of the most common types of market segmentation where companies segment the market by concentrating on various geographic areas. For instance, most restaurant chains are known to undertake their market segmentation process in such a manner that they focus on a limited geographic area to achieve the concentration of force. Moreover, consumer preferences vary from region to region. So, it is important for companies to choose that geographic segment that best aligns with their goals.
Psychographic segmentation
This is a strategy that takes into consideration the lifestyle of people, their activities, interests, as well as opinions to define a market segment. Such types of market segmentation take into consideration the psychographic aspects of the consumer’s buying behavior. They also consider the psychological aspects of consumer buying. A popular example is fashion brands who market themselves based on the lifestyle and fashion needs of their target customers.
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Demographic segmentation
This is one of the simplest and most widely used types of market segmentation. In this market segmentation process, the population is divided based on variables such as age, gender, nationality, income, and occupation. The demographic segmentation variables help divide a large population into specific customer groups. One of the industries that makes use of this market segmentation process is the automobile industry. For instance, station wagons are designed to suit families with more number of members. On the other hand, a Ferrari is designed for high-end customers who have an interest in sports cars.
Behavioral segmentation
In this strategy, customers are grouped based on behavior, usage, and decision-making patterns. The products are marketed to target customers based on their behavioral patterns that define their likelihood to buy or not buy a particular product. Customers tend to evaluate several factors before they arrive at a decision about a purchase. Thus, consumer decision-making is affected by this behavior and that is exactly how the behavioral segments are targeted. Retailers make use of behavioral segmentation the most during festive seasons such as Christmas. The buying patterns of customers are higher during these times, prompting marketers to target these customers more and induce maximum sales.
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