Marketing manager has to identify the target audience to plan the marketing activities ahead. Target audience means the people who would need and buy his product.
There are different types of products available in the market for different types of people. Different types of people are identified through the techniques of Segmentation, Targeting and then Positioning.
Market Segmentation:
It means breaking the whole market into smaller parts on the basis of some common features like geographical area, demographic structure etc.
Marketing targeting:
It aims at evaluating various segments to see their attractiveness and deciding as to which segment the marketer should focus.
Positioning of the product:
It means creating a unique identity of the product or service in the minds of target customers.
The sequential relationship between segmentation (S), targeting (T), and positioning (P), popularly called STP, is S --> T -->P.
Market Segmentation:
It is the process of dividing the total heterogeneous market into relatively distinct homogeneous sub-groups of consumers with similar needs, tastes and preferences. Market segmentation involves dividing a market into smaller parts known as segments requiring different products.
Market segmentation cannot be done in isolation. It has to be followed by ‘targeting the market’ and ‘positioning the product’.
Basis of Market Segmentation
Primarily, segmentation is done for two broad categories of markets:
a) Consumer markets and b) Business markets
Consumer markets are the markets where the consumers buy products for their own consumption.
In Business markets, industrial houses or business persons buy goods and services for further production.
Bases for Segmentation of Consumer Markets
Four bases are used for segmenting the consumer markets are: Geographic, Demographic, Psychographic and Behavioural.
- Geographical segmentation
Segmentation is done on the basis of geography such as regions, states, urban, rural, climate, etc.
In case of multinational companies, identification is done by continent/country/region first, and then go for segmentation on other bases.
- Demographic Segmentation
It is done on the basis of the demography i.e composition of a country’s population. So, it is based on age group, income level, gender, education status, religion, occupation etc.
- Psychographic Segmentation
It is done on the basis of social class, lifestyle, and personality characteristics of a person like thinking, liking, disliking, behaviour and feelings.
- Behavioural Segmentation
In behavioural segmentation, the marketers divide the buyers on the basis of their behaviour patterns like based on use of product based on occasions like Diwali, Holi, Mother’s Day, Father’s Day, Rose Day etc.; benefits sought like Fair and glow to become fairer.
Some Products and Bases of Segmentation
- Magazines - Literacy status, Gender, Occupation, Social-class
- Shoes - Gender, Income, Benefit
- Shampoo Benefit, Age
- Toothpaste - Benefit
- Clothes - Gender, Income, Age, Social-class, Personality
Requirements for Effective Segmentation
A marketer should select a segment that fulfils the following requirements:
- Measurable: It means the segment data should be available.
- Accessible: The segment should be within the reach and could be approached conveniently.
- Large: The segment should be large enough so that the production could be done for that segment.
- Feasible: The segment should be capable of being practically served and be cost effective.
- Different: Every segment so selected should be totally different otherwise there would be chaos.