Market Segmentation Is Your First Step To A Competitive Roll Out
Market segmentation is the first step to undertake in the implementation of your newly designed competitive business strategy.
This brief will take you through the two functional strategic steps that lay at the forefront of your marketing strategy. These are Market Segments and Target Markets:
Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs.
Because each segment is fairly homogenous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy.
That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way and promoted in a certain way.
The similarities may be common characteristics or common needs and desires. Market segmentation comes about as a result of the observation that all potential users of a product are not alike, and that the same general appeal will not interest all prospects.
Therefore, it becomes essential for you to develop different marketing tactics based on the differences among potential users in order to effectively cover the entire market for a particular product.
Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private sector. Small segments are often termed as niche markets . However, all segments fall into either consumer or industrial markets.
The second step following market segmentation is to identify your target market.
Once you have analysed the key market segments that exist, you need to identify your target market. i.e the combination of market segments that is most likely to buy your company’s products.
This will depend on the strategy of your company and the above analysis of the segments and buyer behaviour.
e.g If a company such as BMW is competing on the basis of quality and charging a premium price, its target market may be as follows:
High income, Age 30+, Professional, Homeowner, Business Class, Celebrities etc.
e.g A company such as Toyota (with a low cost leadership strategy) may target a different market as follows:
Lower income, newly employed, Less developed countries, Middle class, Age 20+ etc.
The process of market segmentation is distinct from target marketing (choosing which segments to address) and positioning(designing an appropriate marketing mix for each segment).
Your overall goal should be in identifying groups of similar customers and potential customers; to prioritize the groups to address; to understand their behavior; and to respond with appropriate marketing strategies that satisfy the different preferences of each segment you have chosen. Revenues should thus improve.
Improved segmentation can lead to significant improvement in the effectiveness of your market. If you get your segmentation right, you will purchase the right lists, your advertising results are bound to improve, and you will most likely improve on customer satisfaction.
Segmentation of markets and target marketing are the first primary steps towards enabling you implement a new marketing strategy , whose main goal should be identifying customer needs and to ensure that they are met.
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