Mass marketing is perhaps the oldest form of advertisement known to business. This method targets large groups of people with the hope that among them will emerge willing buyers or users of services. While this method may have some strengths of its own, there are a number of disadvantages that has made it a bit ineffective in modern business. Most traders are now using market segmentation strategy, a move that has been found to greatly increase on the returns.
There are many ways in which the market can be subdivided. These will be largely determined by the nature of market and the type of product that is being sold. Existing commercial laws also have some influence on the type of approach that can be adopted. Once this has been done, the product can be modified to meet the needs of various segments. This is also known as product differentiation.
There are a number of things that you need to have in mind as you segment your consumer pool. Ideal segments have to meet a set of minimum requirements. Each segment must be profitable enough to support the administration costs that are directly attributable to it as well as the costs involved in production of the goods or services. It is also important to ensure that there is homogeneity within the segment.
It is important to use stable criteria when segmenting. Attributes that only exist for a short period of time should not be used. When proper criteria are used, the segment remains in existence for a long time and this gives the marketer an opportunity to reap from the product segmentation that has taken place.
There are set of characteristics that have been frequently used for segmentation. The most common of these is geographical location of consumers. This includes, for instance, dividing the pool of customers based on their country, state or neighborhood of origin. Customer profiles are created based on demographic data and this determines the kind of services or products that they will receive.
Behavioral segmentation is a popularly used type of marketing. The idea here is to divide the consumer pool into different groups based attitude and on the knowledge of various products and services. It encompasses what is referred to as occasional buying. Occasional buyers are customers who buy goods or services depending on the prevailing conditions. This may refer to, for example, the increase in the demand of gifts during Easter or Christmas by Christians. Other occasions that can be used to segment consumers include weddings, birthday parties and funerals.
Another method that is employed is what is termed psychographic segmentation. Here, the customer pool is divided based on consumer psychology and demographic characteristics. Attributes that are used include, among others, personal values, social class and lifestyle among others.
The most important thing to know is that market segmentation strategy may use virtually any form of attribute to create the groups and subgroups. Obvious differences like gender, income and age can be used almost anywhere. When a preexisting variable is used to create the segments, this is known as priori segmentation. When the variables are determined through research, it is known as post-hoc.
There are many ways in which the market can be subdivided. These will be largely determined by the nature of market and the type of product that is being sold. Existing commercial laws also have some influence on the type of approach that can be adopted. Once this has been done, the product can be modified to meet the needs of various segments. This is also known as product differentiation.
There are a number of things that you need to have in mind as you segment your consumer pool. Ideal segments have to meet a set of minimum requirements. Each segment must be profitable enough to support the administration costs that are directly attributable to it as well as the costs involved in production of the goods or services. It is also important to ensure that there is homogeneity within the segment.
It is important to use stable criteria when segmenting. Attributes that only exist for a short period of time should not be used. When proper criteria are used, the segment remains in existence for a long time and this gives the marketer an opportunity to reap from the product segmentation that has taken place.
There are set of characteristics that have been frequently used for segmentation. The most common of these is geographical location of consumers. This includes, for instance, dividing the pool of customers based on their country, state or neighborhood of origin. Customer profiles are created based on demographic data and this determines the kind of services or products that they will receive.
Behavioral segmentation is a popularly used type of marketing. The idea here is to divide the consumer pool into different groups based attitude and on the knowledge of various products and services. It encompasses what is referred to as occasional buying. Occasional buyers are customers who buy goods or services depending on the prevailing conditions. This may refer to, for example, the increase in the demand of gifts during Easter or Christmas by Christians. Other occasions that can be used to segment consumers include weddings, birthday parties and funerals.
Another method that is employed is what is termed psychographic segmentation. Here, the customer pool is divided based on consumer psychology and demographic characteristics. Attributes that are used include, among others, personal values, social class and lifestyle among others.
The most important thing to know is that market segmentation strategy may use virtually any form of attribute to create the groups and subgroups. Obvious differences like gender, income and age can be used almost anywhere. When a preexisting variable is used to create the segments, this is known as priori segmentation. When the variables are determined through research, it is known as post-hoc.
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