This is the summary of a behavioral targeting article by NetMBA.com. It talks about the importance of market segmentation, and the fact that for market segments to work they should be durable, substantial, accessible, identifiable and caters to unique needs. Here’s the link to the original behavioral targeting article: Market Segmentation.
Segment marketing, also known as market segmentation, is the categorization of different parts of the market. In doing so, the needs of potential buyers are better identified and addressed.
Mass vs. Target Marketing
In the world of business, being able to understand and satisfy customers better than competitors is the key; and this is what segment marketing helps to accomplish. By recognizing the differences among various customers, their needs and preferences can be met.
Traditionally, mass marketing, or the treatment of customers as one homogenous group, was done. However, this overlooks the fact that customers are not homogenous at all; they have varying tastes when it comes to buying products. Thus, mass marketing alone is not good for business in the long run.
On the other hand, target marketing views customers as a diverse lot. It recognizes their differing tastes; hence, it is able to offer them with the right products.
Segment Marketing Traits
Segment marketing primarily begins with accurate identification. This entails that each segment must be accessible, or easily reached by communication channels; durable, or stable enough for costs to be minimized; identifiable, or clearly measurable and distinct from other segments; substantial, or large enough to justify the investments put into them; and has unique needs, so that a separate offering for them can be justified.
In sum, a market segment must be homogenous enough to count as one group, and yet heterogeneous enough to be counted as distinct from other market segments.
Segmentation of Consumer Markets
There are different bases for the segmentation of consumer markets, but generally it is done in four basic ways: through demographic, geographic, behavioral, or psychographic characteristics.
1. Demographic segmentation entails grouping customers according to age, gender, ethnicity, occupation, income, and other factors;
2. Geographic segmentation entails the grouping of buyers based on their location or region, the size of the population, and the climate;
3. Behavioral segmentation involves the analysis of customer behavior such as their readiness to buy, brand loyalty, seasonal factors, and others;
4. Psychographic segmentation entails the grouping of customers based on their lifestyle, including their interests, activities, opinions, values, and attitudes.
By utilizing these different bases for segmenting consumer markets, a business can come up with customer categories, which they can target with specialized products and services.
Segmentation of Industrial Markets
Meanwhile, industrial markets, which are fewer but buy in larger quantities, are segmented in three basic ways: through location, company type, and behavioral traits. They generally differ from consumer markets in that they involve distinct types of customers who buy in large scale.
Regardless of the kind of product and market, segment marketing is essential to any kind of business. With thorough knowledge of their potential buyers, companies can gear up for greater sales and revenues.