The essence of the marketing concept is the idea of placing customer needs at the center of the organization?s decision-making. The need to adopt this approach stems from a number of factors, including increased competition, better-informed and educated customers and, most importantly, changing patterns of demand. Primarily it is this change in patterns of demand that has given rise to the need to segment markets. This stems from the fact that higher standards of living and a trend towards individualism has meant that consumers are now more able to exercise their choice in the market place.
Market segmentation can be defined as the process of breaking down the total market for a product or service into distinct sub-groups or segments where each segment may conceivably represent a separate target market to be reached with a distinctive marketing mix. Segmentation and the subsequent strategies of targeting and positioning start by recognizing that increasingly, within the total demand/market for a product, specific tastes, needs and demand may differ.
It breaks down the total market for a product or service into individual clusters of customers, or segments. Here, customers who share similar demand preferences are grouped together within each segment.
Effective segmentation is achieved when customers sharing similar patterns of demand are grouped together and where each group or segment differs in the pattern of demand from other segments in the market. In most markets, be they consumer or industrial, some kind of segmentation can be accomplished on this basis.
The Benefits for a company segmenting a given market ÃÂ· Detailed understanding of customer needs and buying behavior.
The development of differentiated customer propositions, tailored to the needs of profitable customer groups. Market and product appeals through manipulation of the marketing mix can be more delicately tuned to the needs of the potential...