Marketing Assignment Help With Segmenting Business Customers In Mature Markets
Segmenting Business Customers
Generally, the marketers try to target the customer groups in a market. For driving value to this, the marketers use the strategy of Segmentation, Targeting and Positioning. Segmentation involves dividing the heterogeneous market into homogenous groups of customers called segments and targeting involves decisions about these segments. Afterwards, the offer is positioned to such segments.
Market Segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-markets or segments which tend to homogeneous in nature. The consumers in each segment have similar tastes and preferences.
Why is Segmentation done?
Segmentation helps the marketer to become customer focused and produce in accordance to the consumer’s tastes. This way the marketer can develop a separate plan for each market segment.
The major benefits of Market Segmentation are:
- Segmentation helps in determining the right price to be charged from the customers
- Designing of the product in accordance with the preferences of the customers
- Selection of distribution strategy
There are 7 major bases by which segmentation is done:
1. Demographic Segmentation: Demographic profile refers to the age, sex, marital status, income, education, family- size, occupation, religion, beliefs, nationality etc. of a person. When the Segmentation of the market is done with taking in regard the demographic profile of the population, it is called Demographic Segmentation. It is the oldest method used to divide the market. It divides the market and then the products are allocated to each the group that would be useful to them. For example, products like cosmetics, aging creams, nail- polish etc. will be developed taking in regard the taste of women and the products like shaving cream, trimmers etc. will be produced for men. Further, the married people have different choices than unmarried ones. The needs of young and old people are different. The people with higher income tend to buy luxurious and costly goods; whereas poor class goes for necessity goods and the middle-class people look for normal goods. The people in the business field look for things that suit their status whereas people in profession look for goods that will help them in making it easy to do the job. The choices of the people on the basis of their religion as well.
2. Geographic Segmentation: The geographic location also plays a major role in determining the marketing strategy for the business. The market is distributed on the basis of the location, size of the population, the city, the region, whether urban or rural and the climate of the place. The areas can be distinguished on the basis of the terrains and the products can be allocated. For example, there is a huge requirement of woolen clothes in the hilly or mountain areas as compared to the plain areas. There is more alcohol demand in the hilly areas. The people in the tropical areas tend to buy more of the water protection stuff. The people in the urban areas tend to buy high priced packaged and branded products as compared to the simple and homemade products in the rural areas. Thus geographic segmentation is an important type of segmentation.
3. Psychographic Segmentation: The Psychographic Segmentation takes into consideration the different living aspects of the individuals to categorize them in one group. The people are divided on the following basis:
- Lifestyle: Some people have a conservative approach to life and some have a liberal approach. A few are concerned about health and fitness while others are not. There are other people like who seek adventure or status from the products they buy.
- Social- class: It refers to the Lower Class, Middle Class, and Rich Class people.
- Cultural Values: Whether people are Asian, American, Thai, and European etc.
- Personality: If the people are Extroverts, introverts, Aggressive etc.
4. Behavioral Segmentation: Behavior Segmentation takes into consideration how the customer reacts to his needs, motivation, perception, learning involvement, user status, usage rate etc. It is allocated on the basis if the customer is looking for safety, security, basic needs, if he wants to take higher risk or lower risk, if he has a positive or negative attitude, if he is leisure in working or he wants to have the products for fun, use or as an achievement and if he is a heavy user, or a medium user. This helps in deciding the marketer as to what product he should build and for what market.
5. Value-Based Segmentation: This refers to the segmentation which involves producing the product as per the needs of the consumers. It takes into consideration a specific segment it wants to make the products for and produces as per the requirement. It basically focuses on creating a value to the consumer in the market through the products.
6. Volume Segmentation: Generally, in a market, the 80 % of the goods so produced is consumed by the 20 % of the population and the rest of the 20 % of the goods are consumed by the 80 % of the population. Thus the users need to be classified into the light users, heavy users and medium users. The marketer needs to target the group which will be best for his profit. Very less marketing is required for the product having heavy users as compared to the light users. This can help the marketers design an efficient and effective technique to fetch the consumers for their product.
7. Benefit Segmentation: Sometimes what drives the consumers to buy a product is the benefit derived from the product. Sometimes the specific benefit provided by the product helps in fetching the customer. For example, a customer might be looking for a low priced good or his preference could be good taste, speed etc. The consumers seek to benefit from such products. The main benefit sought is used to classify the consumers. However, the relative importance attached to individual benefits differs from one group to another.
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