Know What is Market Segmentation, Benefits and Examples

Market segmentation
Market segmentation

In marketing strategy material in science Management, the term market segmentation we must have heard. The term market segmentation is at the same time an important instrument and it is very necessary to understand in Economics. Especially in marketing, because with it the marketing strategy will be more successful. Sales and profits obtained by the company will also be higher. The following is the definition, benefits and examples of market segmentation.

Definition of Market Segmentation

The definition of market segmentation is the division of a heterogeneous market into homogeneous buyer units, where each buyer unit will be the target market that can be achieved using its own strategy. It can also be understood that the market was initially very broad, then divided or the term was segmented by marketers into parts of the market that were more homogeneous in nature. In relation to market homogeneity, marketers will be able to determine for themselves based on their needs.

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Market segmentation is part of the company's strategy and is not solely done by differentiating products or creating a new product, but is carried out according to the different interests and needs of consumers. This segmentation is also part of the product marketing philosophy which will later argue with consumers or buyers. This segmentation is also important so that product marketing can increase and be more focused. Resources owned by the company can also be used more effectively and efficiently.

Market Segmentation Goals

The company certainly has a specific goal of implementing market segmentation. Here are some of the market segmentation goals of a company.

  1. The market will become easier to distinguish. Moreover, because each consumer will have different tastes and types of favorite products from each other. One company alone will not be able to meet all consumer desires. The company will choose only one consumer group that is homogeneous. This consumer group will be easier to understand and fulfill their tastes.
  2. The company will also provide the best service to its buyers. In meeting their needs, consumers will want good product quality, affordable prices and good service including punctuality. The company's consumer desires must be understood, especially regarding services. Service can be a special attraction and will be maximized if the company has understood the consumer's desires based on the segment it wants to target.
  3. The next benefit of market segmentation, especially for companies, is that the marketing strategy carried out will be more focused. This is mainly because the company will serve heterogeneous as well as broad consumers. Through market segmentation, companies will be more focused in serving homogeneous consumers. The marketing strategy will be more focused. Fund management will also be more helpful in directing funds to potential markets that are considered the most profitable. A clear target will make a product plan that meets market demand and is accompanied by the most appropriate promotion methods.

definition of market segmentation

Conditions for the Application of Market Segmentation

The market segmentation strategy that is applied must also meet various requirements. The following are some of the requirements that must be met so that market segmentation can run effectively and efficiently.

  1. Market segmentation must be measurable or measurable, both in terms of size and breadth. An example of this measurable market segmentation is consumers who buy certain fashion products because they are interested in the model or design.
  2. Actionable or implementable, where each marketing program that is prepared must be able to run and serve market segments effectively and efficiently
  3. Accessible or attainable. This means that the market segmentation made by the company can be used as a target market or target market.
  4. Substantial or broad enough. Market segmentation is intended to make a market that was previously wide into a narrow one. However, this does not mean the market group becomes very narrow. Homogeneous markets must remain broad enough so that firms will benefit when the group is served by firms. This requirement should assist the company in assessing the market feasibility of a particular product to be segmented or not.
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Product Differentiation in Market Segmentation

What must be understood next in a market segmentation paper is product differentiation. Product differentiation is one of the important points and can be done in various ways. According to Philip Kothler, product differentiation consists of the following.

  1. Products may include features, colors, specifications, product design, and others.
  2. Service includes speed, empathy, convenience, delivery service and so on.
  3. Distribution channels include the breadth of distribution, the shape of the distribution channel, the ability of the seller and others
  4. Human resources include skills, work culture and others
  5. Company image includes logo, brand, character association and others

Apart from Philip Kothler, Rosabeth Moss Kanter also has her opinion regarding the product differentiation business. The product differentiation step, according to Rosabeth Moss Kanter, is carried out with the company's three main assets, namely concepts, competencies and connections.

  1. Concept is the company's ability to generate ideas and innovation through continuous innovation efforts.
  2. Competence is the ability to carry out the process of providing value to customers by producing certain competency standards that are increasing.
  3. Connection is the company's ability to cooperate with associations or partners.

 

Market Segmentation Basics

We also have to understand the basics of market segmentation. This is intended so that market segmentation can be maximized and of course effective. There are three basics in segmenting the market, namely demographic, geographic and psychographic.

  1. The basis of market grouping according to demographics is related to population. Demographics are mainly the basis for segmentation because population data will be easily measured and consumer needs will be related to population variables. Included in this demographic data are age, gender, religion, education, occupation, income, family type and others.
  2. The second is geographic. Geographical segmentation means that grouping is carried out based on aspects of residence, area and location. Segmentation will be developed into various parts such as area of ​​population density, area and climate.
  3. The last basis for market segmentation is psychographics. Market grouping will be done based on personality traits. This includes social class and lifestyle.

Case Examples in Application of Market Segmentation

Examples of cases of market segmentation are very diverse around us. An example is a cell phone product. Mobile phone vendors certainly issue various variants and types of various kinds. The mobile market is also very broad. For this reason, vendors are segmenting where low-end phones with affordable prices and limited features are aimed at the lower middle class or those who have their first mobile phone. Meanwhile, flagship type phones with full features and a fairly high price will be aimed specifically at those in the upper middle class.

In this case, mobile phone companies divide the heterogeneous consumer mobile phone market into homogeneous markets. Promotions are carried out differently depending on the product and the consumers you want to target. This is a description of what market segmentation is, its benefits, the basics and an example of a case. Hopefully the description above can be useful for all of us.

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