Sometimes, a seller or business person produces products, keeping in view only a specific sector of the whole market. This not only makes things easier for him but also gives his products an edge as he then specializes only in particular products.
Here in this post, we have discussed about levels of market segmentation.
Market Segmentation in Marketing Management
Market Segmentation is a marketing term that refers to the process of dividing a large target market into smaller, more homogeneous sectors based on certain characteristics. These characteristics or variables can be demographics, geographical location, attitudes, behaviors, etc.
The process of market segmentation is carried out to identify distinct groups of customers who share similar behaviors, needs, preferences, or other relevant attributes.
Market Segmentation understands that not every customer is the same and that the typical one-size-fits-all approach may not be the most useful and effective way to reach and engage with customers. To tackle this, businesses segment their market, so that they can tailor their marketing efforts to specific customer groups, allowing for more precise messaging customer communication, and product positioning.
Importance of Market Segmentation
Following are some points that clearly outline the significance and requirement of market segmentation:
- Promoting proper selection of target market
- Assists in planning and marketing exercises
- Aids in the tapping of the market
- Makes the marketing effort more effective
- Accesses the strengths and weaknesses of the company
- Helps in the effective usage of marketing resources
- Helps in balancing proper coordination between the company and its customers
Levels of Market Segmentation
Marketers divide markets into segments, so they can focus on specific marketing plans. Each level of market segmentation decides the strategy that a company will follow in order to promote, distribute, and position its product in the market with respect to its target audience or customers.
The different levels of market segmentation in marketing management are as follows:
1. Mass Marketing
Mass marketing is also called ‘Undifferentiated Marketing’ because it believes that in the market, most people have similar characteristics – such as behavior, consumption, and pattern, and it does not differentiate the whole market on the basis of factors like consumer taste, age, gender, preference, etc.
Mass marketing, thus refers to the strategy of targeting the entire consumer market by marketing one single product through means of a single marketing message.
A huge amount of money is spent on promotion and advertising of the product that attracts all potential customers. Due to mass production and economy of scale, the per unit cost is low while profit margins are high. The competition level in mass marketing is also high.
2. Segment Marketing
Marketers, or sellers of a product, in segment marketing, divide the entire market into different segments, based on consumer behavior, gender, purchasing power, location, social values, etc.
For example – a clothing retailer might target different customer segments based on age groups (e.g., children, teenagers, adults) and offer clothing lines and promotions respectively.
It is also known as ‘Differentiated Marketing‘ as it differentiates the whole market into many segments.
The biggest advantage of Segment Marketing is that it enables marketers to understand the pain points or problems of each segment and thus respond in the best way possible. By connecting to each of the market segments, the firm can make more sales thus increasing profit, and also satisfy each of the targeted segments. However, in this type of marketing, the firm needs to adopt a separate marketing strategy for each of the market segments, which might be difficult at times.
Thus, segmenting the market is a complex process as businesses need to develop tailored marketing strategies and offerings to each target segment separately.
3. Niche Marketing
In niche marketing, businesses target a small and well-defined subset of the market that needs specialized attention. It is a highly specialized level of market segmentation, as the marketer only concentrates on a specific market segment and its customers and their distinct need, want, and characteristics.
For example – a company involved in making organic and gluten-free snacks may target only health-conscious individuals who have specific dietary requirements.
It is thus called ‘Concentrated Marketing’ as businesses focus on serving a niche market with unique services and products, or expertise.
In this type of marketing, competition is usually low, so there’s an opportunity for marketers to charge high prices to customers.
4. Local Marketing
As the name suggests, local marketing is simply the marketing of locally produced products in the local markets or areas.
For example – a farmer selling his vegetables to his neighbors, community people, and other people of his village in the local farmers’ market.
The market size is small with low-cost advertisements, low transportation costs, frequent delivery, and speedy services.
5. Individual Marketing
This type of marketing, also called ‘one-to-one marketing’ or ‘personalized marketing’, is one where marketers focus on individual customers through a salesperson or direct communication channel.
This is a micro marketing strategy which is like direct marketing, where the marketer individually communicates or even visits and offers his services to the target customer. This marketing is mostly used in B2B marketing where attention is specifically given to market products. In this scenario, the customers are targeted individually by calls, SMS, or email.
This level of segmentation requires high efforts as it involves tailoring products and services, and marketing messages to each specific customer based on their unique characteristics, preferences, and behavior.
The Final Word
The ultimate purpose of market segmentation is to enable businesses to develop more targeted marketing strategies that will effectively meet the diverse needs of different customer sectors or segments.
Market segmentation strategies make it easier to target and personalize marketing campaigns. A successful marketing strategy’s job is to target a segment or section of the market by dividing them into groups that share similar characteristics. This in turn allows for targeting a large number of potential customers, instead of targeting individual customers separately.
Thus, Market Segmentation is a process that makes marketing efforts more efficient in terms of time, cost, and other resources.
