Market segmentation is the process of dividing a homogenous market into clearly identifiable groups having similar needs or wants.
It helps you design different strategies to satisfy the needs of different customer groups. A company needs to know what its target market is, and this is where market segmentation comes in handy.
There’s more than one way to approach market segmentation, depending on the nature of the organisation’s goals.
Types Of Market Segmentation
- Lifestyle segmentation: Lifestyles vary from person to person. Splitting consumers into groups based on their lifestyle allows you to analyse their attitudes, values, perception, and emotions, and helps you serve them better.
- Geographic segmentation: The needs and preferences of people vary based on where they live. This type of market segmentation helps you to serve people based on where they are located, whether it’s international, national, or local.
- Demographic segmentation: You could target customers more accurately based on characteristics like age, race, religion, gender, ethnicity, income, and education. Demographic segmentation will help you to target your strategies to reach groups of customers within the same demographic.
Why Market Segmentation?
- You will be able to identify markets that you haven’t targeted yet, and devise new channels of distribution to help your company focus on them and receive better returns.
- Market expansion is easily possible if you use geographic strategy and cater to a particular territory.
- Market segmentation increases competitiveness, which definitely helps increases sales. When sales increase, profits follow.
- Market segmentation will allow you to organise your total marketing budget and allocate your resources in the best possible way.
The importance of market segmentation is popular knowledge, and both large companies and small companies can benefit from it. Marketers would help you choose the type of market segmentation that suits your company.
Implement effectively, and let the profits roll in.