Nowadays the potential customer base for the companies is broader than ever as is the risk of spending a considerable amount of money trying to seize as much new clients as possible ending up catching none. As the competion for market share among firms becomes embittered, both the importance of focused and effective marketing campaigns and the necessity to target the "right" consumer in order to avoid a waste of monetary resource due to a tight budget constraint grow.
Hence the importance of an effective market segmentation that allows company to divide their markets into sub-markets or segments with similar and peculiar needs and wants. the segmentation of the market is just the first step for the company who wants tailor its marketing mix to fit the specific requirements of that segment.
The second step is to decide which market segments it can serve effectively. Decisions related to which market the company can effectively serve is a tugh one. It requires a deep understanding of customer behaviour and a careful strategic thinking. We are going toward and overlapping of markets and segments, a huge traffic jam that make it much more difficult to understand what makes each segment unique and different that it was 20 or 30 years ago ( for example, think about the overlapping in the computer world with notebooks, netbooks, laptops and now phones with applications that make them more similar to computer than to devise to perform their original function, PDA and so on ).
The third step is to find distinctive ways companies can effectively position their offering in the mind of the consumers and differentiate their market offerings in order to achieve distinctive, lasting and difficult to replicate competitive advantages.
An example of market segment is that of the "baby boomers", people who were born in Europe between 1946 and 1964. In 2004, baby boomers held 80 percent of the UK wealth and bought 80 percent of all top of the range cars, 80 percent of the cruises and 50 percent of the skin care products ( D. Walker 2004, Live Fast, die old - BBc newsOnline Magazine ).
Being a wealthy segment, it is quite normal that it has attracted the attention of marketers and companies and has provided a great deal of marketing opportunities over the years.
The "baby boomers" segment gives us the opportunity to discuss about the dangers that come with the market segmentation. In the UK, comopanies such as saga and First Choice have tried to make the over-g0s market trendy. However, as they age, many baby Boomers have showed their displeasure at finding themselves on these companies mailing list ( D. Cowley 2004, Boomers turned off by attempts to make them belonging to a group, Financial Times, 25 January ).
The importance of market segmentation is evident if we look at the neumber of companies whose main activity is to segment the market for other companies. http://www.marketsegmentation.com/ gives an idea of such companies.
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If a company segmenting a market correctly, this will help to increase the return on their marketing and sales expenditures. Individuals usually focus on social esteem and finding a product that meet their needs and wants. The most effective strategy is deep understanding of a customer’s behavior. Also, positioning and differentiating of their products, goods or services in the mind of the customers. As the article said, “baby boomers” have majority of UK and the United States wealth and attracting this market is huge success.
RispondiEliminaI would say that the need for market segmentation is to help understand and define a business. It will give a clear picture of your customers and competitors. More important, it determines what you do – your strategy.
RispondiEliminaAlso, it goes beyond of waste of monetary resources. Market segmentation will, eventually, help to improve productivity and it can be explained as follow:
“In a broader perspective, an increase of productivity is due to a squeeze in waste of resources, to narrower limits of irrational processes of production and governance, to an effective link between market and social needs.”
Further, there is also the concept or principle of promote growth in output by bringing additional inputs into production. Segmentation allow businesses to bring quality inputs required such as technology
That will help the company to improve their position in the Market.
The idea is to choose drivers that are significant for the company to avoid splitting important inputs (resources). Kotler mentions five criteria for an effective segmentation:
• Measurable: It has to be possible to determine the values of the variables used for segmentation with justifiable efforts. This is important especially for demographic and geographic variables. For an organization with direct sales (without intermediaries), the own customer database could deliver valuable information on buying behavior (frequency, volume, product groups, mode of payment etc).
• Relevant: The size and profit potential of a market segment have to be large enough to economically justify separate marketing activities for this segment.
• Accessible: The segment has to be accessible and servable for the organization. That means, for instance, that there are target-group specific advertising media, as magazines or websites the target audience likes to use.
• Distinguishable: The market segments have to be that diverse that they show different reactions to different marketing mixes.
• Feasible: It has to be possible to approach each segment with a particular marketing program and to draw advantages from that.
http://www.businessplans.org/Segment.html
http://www.netmba.com/marketing/market/segmentation/
http://www.greenbook.org/marketing-research.cfm/examples-market-segmentation
http://www.themanager.org/marketing/segmentation.htm
http://www.learnmarketing.net/segmentation.htm
Market segmentation representes the effort tha companies made with the goal of identify and categorize its potential customers. The more and more companies go global, the more need companies a market segmentation, that allows them to pursue expansion in the new geographic markets.
RispondiEliminaDifferent kind of companies have different kind of market segmentation for example teen magazines follw an age segmentation, but other companies like Apple follow a psycographic segmentation.