Market Segmentation ( Requirements for meaningful market segmentation,…
Requirements for meaningful market segmentation
The segment must be reachable.
The segment must be responsive
The segment must be substantial and sustainable.
A target market can then be selected, which is a specific segment for which marketing management develop & implement a marketing strategy.
The segment must be identifiable and measurable
A market consists of a relatively large number of people who:
Are willing to spend money on it.
Are legally able to buy the product
Have the money to buy the product
Have a need for a specific product
Effective market segmentation should follow these steps:
Group these identified needs of consumers into homogeneous subgroups/segments that have similar characteristics.
Identify the needs of the consumers in the market.
Select target markets on which the company will focus its marketing effort based on its resources & know-how.
Position the product/service offering within the selected segment or segments
The total market in a country can be subdivided into the following markets:
Consumer Market: conists of individuals/households purchasing products for their own consumption
Industrial Market: consists of individuals, groups of people/organisations purchasing materials & products to be used in the production process
Resale Market: includes individuals, groups/organisations purchasing products in order to sell them to final customers
Government Market: consists of the state institutions & departments that purchase various products needed to supply services to the public
Criteria for market segmentation
Demographic-Age, gender, income, family size, race, religion, education, family life cycle
Psychographic-lifestyle, personality, social class
Geographic-region, city, Density, climate
Behavioural-Purchase occasion, benefits sought, user status, usage rate, loyalty status, readiness stage, attitude to product.
Total-market approach(Market aggregation)
Marketing management may decide to target all consumers in a similar way if they assume that all potential consumers have similar needs regarding the market offering
The market-segmentation approach
The process in which the total heterogeneous market is divided into smaller, more homogeneous groups with relatively uniform needs/characteristics.