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Market Segmentation

segmentation, market segmentation, marketing, selling, market analysis, demographic segmentation

A further choice to be made by companies deciding on their product mix is whether to attempt to provide a product or range of products that appeals to the maximum number of people or whether to select a small group or groups of people in the marketplace and concentrate on pleasing them. The process of selecting carefully analyzed 'segments' of the market and designing products to meet the requirements of that particular group of people is known as market segmentation.
A large organization aiming at a major market share will try to satisfy many different segments. There are various ways in which markets can be segmented:

A. Demographic Segmentation
This means by age or sex. For example, a shoe manufacturer might concentrate (as some have) on children's shoes, on high-fashion shoes for women or on men's safety shoes for industrial use, rather than attempt to provide shoes that will be reasonably satisfactory for everybody in all situations.

B. Segmentation by Personal Taste
With products such as food, not everybody's tastes are the same, and a product that satisfies most people will leave others not completely satisfied. People less than completely satisfied by the 'standard' product form a ready market for a product formulated rather differently to meet their particular requirement. The attempt to meet these differing tastes is seen, for example, in the instant coffee market, which offers a range of special blends in addition to the 'standard brew'. Taste may also be a factor of course in terms of design, styling, color etc.'Segmentation by benefits' emphasizes the different attributes of a product that appeal to different segments, e.g. the same car may appeal to some people because of its economy, to others because of its safety features.

C. Geographical Segmentation
Concentration of effort can be achieved by aiming products only at those regions or countries containing a high proportion of customers for a particular product.

D. Segmentation by Ethnic Groups
In societies where there are different ethnic groups, it will often be necessary and profitable to produce distinct product ranges to suit their different tastes and requirements. Obvious examples are ranges of food products and cosmetics.

E. Psychographic Segmentation
With many simple consumer products, such as cigarettes, drinks and toiletries, people may have strong brand preferences, even though the measurable physical performance, of the various brands may be virtually indistinguishable. Brand name, packaging, promotion, etc. are used to give the brand an 'image' which enables individual psychological and emotional preferences to be expressed. A related approach is segmentation by lifestyles.Focused marketing is the term often applied to the whole process (of which segmentation is part) of developing specific marketing mixes developed for selected groups of people, rather than trying to be 'all things to all people.

F. Niche Marketing
It sometimes pays for a company to focus its efforts on a very small, carefully chosen segment or 'niche'. In that way it can satisfy the needs of one particular group of people extremely well and extremely profitably. The appeal of niche marketing to smaller companies is niche markets are small harbours which the supertankers cannot reach.'
Published: 2007-04-29
Author: Martin Hahn

About the author or the publisher
Martin Hahn PhD has received his education and degrees in Europe in organizational/industrial sociology. He grew up in South-East Asia and moved to Europe to get his tertiary education and gain experience in the fields of scientific research, radio journalism, and management consulting.

After living in Europe for 12 years, he moved to South-East again and has worked for the last 12 years as a management consultant, university lecturer, corporate trainer, and international school administrator

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