Additionally, as segmentation can help outline the most valuable consumers, firms can focus their marketing efforts on those consumers who are most likely to make purchases. Geographic segmentation involves segmenting consumers based on geographic location such as by county or by city. Divisions can be made in terms of:. Demographic segmentation involves segmenting consumers based on demographic information such as gender, age, income, education, etc.
These are some variables using which demographic segments are created:. Behavioral segmentation involves segmenting consumers based on behavioral traits such as loyalty and spending habits.
This method of segmentation groups consumers in the following ways:. Psychographic segmentation involves segmenting consumers based on psychological traits such as values and hobbies.
These are some variables using which psychographic segments are created:. Behavioral segmentation, on the other hand, focuses on customer behavior, such as their purchasing habits. The goal of market segmentation is to help businesses understand distinct groups of consumers that make up their market.
By grouping people with similar characteristics and attributes, marketers can effectively target the segments that are most valuable to their business. Explore Voxco Survey Software. Retail Customer Experience Trends in ———.
Separated according to the amount of investigation required to identify and evaluate different criteria, the layers are arranged to begin with demographics as the area easiest to assess. Then come increasingly complex criteria, including company variables, situational factors, and personal characteristics.
The authors warn, however, that a nested approach cannot be applied in cookbook fashion but rather must be adapted to individual situations and circumstances. As difficult as segmenting consumer markets is, it is much simpler and easier than segmenting industrial markets. Often the same industrial products have multiple applications; likewise, several different products can be used in the same application. Customers differ greatly, and it is hard to discern which differences are important and which are trivial for developing a marketing strategy.
Little research has been done on industrial market segmentation. Our research indicates that most industrial marketers use segmentation as a way to explain results rather than as a way to plan. In this article, we integrate and build on previous schemes for segmenting industrial markets and offer a new approach that enables not only the simple grouping of customers and prospects, but also the more complex grouping of purchase situations, events, and personalities.
It thus serves as an important new analytical tool. Segments exist, even when the only apparent basis for differentiation is brand choice. At other times, a marketer may be baffled by a profusion of segmentation criteria. Usually, a marketer can group customers, prospects, and purchase situations in different ways depending on the variables used to segment the market. The problem is to identify relevant segmentation bases.
We have identified five general segmentation criteria see Exhibit 1 , which we have arranged as a nested hierarchy—like a set of boxes that fit one into the other. Moving from the outer nest toward the inner, these criteria are: demographics, operating variables, customer purchasing approaches, situational factors, and personal characteristics of the buyers. Exhibit 1 shows how the criteria relate to one another as nests. The segmentation criteria of the largest, outermost nest are demographics—general, easily observable characteristics about industries and companies; those of the smallest, innermost nest are personal characteristics—specific, subtle, hard-to-assess traits.
The marketer moves from the more general, easily observable segmentation characteristics to the more specific, subtle ones. This approach will become clearer as we explain each criterion. We should note at this point that it may not be necessary or even desirable for every industrial marketer to use every stage of the nested approach for every product.
Although it is possible to skip irrelevant criteria, it is important that the marketer completely understand the approach before deciding on omissions and shortcuts. The outermost nest contains the most general segmentation criteria, demographics. These variables give abroad description of the company and relate to general customer needs and usage patterns. They can be determined without visiting the customer and include industry, company size, and customer location. Knowledge of the industry affords a broad understanding of customer needs and perceptions of purchase situations.
Some companies, such as those selling paper, office equipment, business-oriented computers, and financial services, market to a wide range of industries. For these, industry is an important basis for market segmentation. Hospitals, for example, share some computer needs and yet differ markedly as a customer group from retail stores.
Marketers may wish to subdivide individual industries. For example, although financial services are in a sense a single industry, commercial banks, insurance companies, stock brokerage houses, and savings and loan associations all differ dramatically.
Their differences in terms of product and service needs, such as specialized peripherals and terminals, data handling, and software requirements, make a more detailed segmentation scheme necessary to sell computers to the financial services market. The fact that large companies justify and require specialized programs affects market segmentation. It may be, for example, that a smaller supplier of industrial chemicals, after segmenting its prospective customers on the basis of company size, will choose not to approach large companies whose volume requirements exceed its own production capacity.
The third demographic factor, location, is an important variable in decisions related to deployment and organization of sales staff. A manufacturer of heavy-duty pumps for the petrochemical industry, for example, would want to provide good coverage in the Gulf Coast, where customers are concentrated, while putting little effort into New England. Customer location is especially important when proximity is a requirement for doing business, as in marketing products of low value-per-unit-weight or volume such as corrugated boxes or prestressed concrete , or in situations where personal service is essential as in job shop printing.
As noted, a marketer can determine all of these demographic variables easily. Industry-oriented and general directories are useful in developing lists of customers in terms of industry, size, and location. Government statistics, reports by market research companies, and industry and trade association publications provide a great deal of demographic data. Many companies base their industrial marketing segmentation approach on demographic data alone. But while demographics are useful and easily obtained, they do not exhaust the possibilities of segmentation.
They are often only a beginning. Here are several more methods you may want to look into. In a recent survey of marketing professionals in North America, 62 percent of respondents said improving audience segmentation to enable more precisely targeted messaging was a top priority.
Market segmentation offers many benefits to marketers, publishers and others, including the following advantages. Market segmentation can help you to improve the performance of your marketing campaigns by helping you to target the right people with the right messaging at the right time.
Segmentation enables you to learn more about your audience so you can better tailor your messaging to their preferences and needs. Targeting a specific segment that is likely to be interested in your content or product is much more effective than targeting an overly broad audience. If you advertise to an entire market, you will end up spending a massive amount of money on ads, but a relatively small percentage will convert.
If you instead direct your marketing to a segment with the right characteristics, you can increase the conversion rate of your campaign considerably. The more specific the audience of people interested in your brand, the more beneficial targeting can be. Marketing them to a broad audience would result in wasted ad dollars.
You might split your audience up by age and push individuals ads that show people who are close to their age. Market segmentation can also help companies to develop products that better meet the needs of their customers. You can create products to appeal to needs your main market segment may have and develop different products tailored to different parts of your customer base. Say, for instance, you run an automotive company, and your primary market segment is middle-class families.
You would likely design your car with lots of seating, leg room and space to accommodate a family with multiple kids. You would also create mid-range priced vehicles. You could, however, also segment your audience further, and create vehicles that appeal to each of those segments. For example, one segment might be families who like to go on outdoorsy vacations. To appeal to this group, you could offer a vehicle with four-wheel drive and lots of cargo space.
Another segment might prefer to take trips into the city. You might make this car smaller so that the drivers can easily navigate narrow city streets and fit into tight parking spots.
Designing your products with the needs of your customers in mind will help you to sell more and will make your customers happier. Market segmentation can also help businesses to identify audience segments that they are not currently reaching with their marketing efforts and then expand into new markets. For example, a company might make the majority of their sales in physical stores. When looking at behavioral data, they might see that many of their customers like to shop online. Based on this information, they could then either open an online store or stat advertising their online marketplace more.
As another example, a clothing company that primarily targets middle-aged women might decide to start selling kids clothing as well. They could introduce these items and market them to their current customers, encouraging them to buy them for their kids. Market segmentation can also help businesses to focus their efforts, which enables them to establish a brand identity and specialize in a particular type of products. A brand that tries to appeal to everyone in their marketing will come off as generic and unmemorable.
It could also leave customers confused about what the brand stands for and what kind of company it represents. As your company grows, you can expand your offerings, but when first starting out, it can be challenging to differentiate your company if your product offerings are too broad. Market segmentation can also help to inform other important business decisions regarding how you get your product to customers.
These decisions may involve matters such as pricing and distribution. Businesses can use segmentation to help them decide on pricing that maximizes sales while keeping customers happy. Companies may consider demographic information such as income levels. Paying attention to seasonal demand changes can help businesses time special deals to boost sales. This helps businesses in making informed decisions with respect to the deliverance of their products or services, to their target consumers.
Gaining insight into the perceptions and preferences of their target consumers, they are better able to project their offered goods and services as valuable entities for their consumer bases. Since market segmentation is considered as a facilitator towards the identification of specified consumer segments and their respective needs and requirements, as elaborated earlier, it helps businesses in offering their goods and services in accordance with the acknowledge consumer demands.
Consequently, through market segmentation, businesses are better able to fulfil the needs and requirements of their target consumers and attain a competitive edge over others. Though market segmentation is one of the most acknowledged tools of marketing in the present times, still there are some shortcomings that entail the concept of market segmentation, and for that very reason, it is subjected to widespread criticism.
Hence, many point towards the possibility of businesses missing out on any potential consumers, who may not be a part of the identified consumer segments. Moreover, questions and concerns are raised about the viability of quantitative survey and analysis for market segmentation. Since quantitative studies are more objective in nature, it is possible that relying on quantitative data companies and businesses might not be able to gain some information that may relate to abstract concepts of human behaviour.
Individuals essentially show diversity in characteristics and behaviour, and at times it may not be reasonable to generalise and subject a finding to a particular group of people. Hence, it is argued that applications of market segmentation do not confer to the principles of diverse dynamics of a particular consumer segment and varying individual behaviour. The very first step in segmentation consists of identifying variables through demographics i. How so? Because every experienced marketer knows that different customers buy for different reasons and different customers engage with a product or service in different ways.
Marketers should, in fact, use market research techniques tailored to finding out more about their target, for example, their purchase situation. Accordingly, segmentation consists of identifying variables through behaviours i. Most of these variables necessitate the marketer to analyse the customers in the market through primary research methods, like surveys, customer service , or hiring consultants to undertake research projects.
Simply put: you will need data. The advantage of deeper segmentation is likely to be competitive gains over rivalling companies whose segmentation efforts were more superficial. To get access to such information marketers must be aware that they will spend a surprising amount of resources and time to collect data which customers are sometimes not so keen to share Qualitative research is preferable because it showcases real stories that are the key to convincing stakeholders.
Whichever approach you take to gain relevant data and segment your market, segments should be fashioned according to the following six characteristics: Identifiable, substantial, accessible, stable, differentiable and actionable. To wrap it up: when segmenting your market, make sure you are asking yourself if you have targeted all those potential customers that fit into the segment, whether you understand your target fully, if your target will benefit from your products and services and if they can afford them, and if your idea, product or service is easily accessible.
Now all your business needs is marketing objectives and a plan. Next you need to devise a marketing strategy. Given the current state of the economy, devoting time and resources to identify more targeted markets can help you maximise your marketing strategy. This process — knowing when and to whom to market your product or service — can result in much higher rates of return.
No one can afford to target everyone. Small businesses can effectively compete with large companies by targeting a niche market. With a clearly defined target audience, it is much easier to determine where and how to market your company. Here are some tips to identifying a good marketing strategy.
0コメント