The term market segmentation can be defined as the ability of the business to define its target market and be able to offer the product or service of value to a specific segment. With a large number of potential customers it is not feasible for a business to cater to all segments, instead a business must identify its target market and provide a specific product or service to it.
In a competitive business where competitors are trying to outdo each other in every possible area, it becomes important for businesses to develop strategies that would enable them to differentiate themselves from their competitors in the market. It would be impossible for a business to create new markets by itself, it needs to tap into market segmentation advantages. The segmentation benefits of business came to light when a business identifies its target market and comes up with an effective marketing strategy.
One of the market segmentation advantages is that businesses could better understand and target the best customers that they are aiming at, as compared to their competitors who were already using the product or service that they want to promote. It would be easy for a business to identify its customers because it could compare its sales figures with its competitors.
By knowing the characteristics of customers, a business would be able to better improve its products and services. It would also be able to provide a product or service that will be beneficial to the best customers of its competitors. A business would have to learn about the various segments in order to cater to them. Once it has identified the segments, it would be easier for a business to develop a marketing strategy that would benefit those customers.
Another market segmentation advantage is that business segment could be segmented based on geography. The geographical areas of a business could also be identified so that a business could better target specific segments of customers within a specific geographical location. This is known as geo-targeting. This would be an easy way to identify a segment because geographic information systems would give an accurate business data regarding geographical locations.
Another business segmentation advantage is that businesses could target a certain market segment only. This can be done by a business by keeping an eye on the trends and preferences of a particular segment. It can identify the trends in customer behavior and use these to plan future campaigns to cater to this segment’s demands.
A segment could also be segmented based on language. For instance, in English language, there are several major categories including business language, commercial language, professional language and business. These segmentation advantages would allow a business to offer its products or services to this group of consumers.
Other market segmentation advantages include the ability to analyze the behavior of customers, the behavior of their purchasing habits and the demographics of the segments, such as age, gender, education, occupation, geographic location etc. With market segmentation, business owners could be able to get an understanding about the preferences of the people they are serving.
With all these advantages in mind, it is easy to see why there are so many segments that can be segmented. Here are some of the segments that can be segmented in marketing:
Business to Business: This segment includes products of different industries. These products would be more focused on the products and services that can be purchased by businesses rather than by households.
Consumer Segment: This segment includes the products and services that consumers have a need for. and the marketer has a specialization in providing these products and services. The segment could include the products and services that cater to the basic needs of the people, like food, shelter, clothing, leisure, travel, information and entertainment, and others.
Consumer-Service: This segment would include the products and services that help the consumer to deal with the problems of daily life. and those services that help businesses meet their needs. These products and services are specialized in nature and not available to other people. This would include services like cleaning, home improvement, maintenance, health, household services, legal advice and many more.