What is Market segmentation? Meaning, definition, Importance/ Needs, Bases, Advantages/ Benefits.
What is Market segmentation? Meaning, definition, Importance/ Needs, Bases, Advantages/ Benefits.
What is Market segmentation in Marketing? Definition of Market segmentation, Bases for Market segmentation, Importance/Needs of Market segmentation, Advantages/ Benefits of Market segmentation.
Hello friends, Let's talk about this.....
In this post you will learn one of the vital topics in Marketing, i.e. Market segmentation.
Generally, students study their topics only in theoretical way, in Textbook way, They don't understand and analyze the practical aspects. We will see both practical & theoretical aspect of Market segmentation.
We will learn:-
1)What is Market segmentation? Meaning & Definition.
2) Importance/ Needs of Market segmentation.
3) Bases for Market segmentation.
4) Advantages/ Benefits of Market segmentation.
Let's see what is Marketing segmentation with the help of theory and practical examples. This discussion between us will be interesting. So, let's go.
Meaning & Definition of Market segmentation? Meaning, Definition, Importance/ Needs, Bases, Advantages/ Benefits.
1. What is Market segmentation? Meaning & Definition.
According to Philip Kotlar,"The act of dividing a market into distinct group of buyers who might require separate products and/ or marketing mixes." So, Market segmentation means dividing heterogeneous market into various sub units on some basis. But hey why its important? Let's see...
A market is a place where Consumers and Sellers come and exchange things. But market is full of many potential consumers having different types of needs, income, preferences, styles, thinking, etc. One product, one company cannot satisfy all needs of all consumers. Resources will not be utilized optimally. There will be no Customization. Did you understand fullyyy....... Noooo. Example will help you :
"Anand Milk Union Limited" is a good example. Why are you looking at me like this..???? Its "Amul". Yes, now you recognize the name. Under the famous tagline " The Taste of India" Amul offers different products for different kind of customers. Amul customizes the product according to that group of customers. See the photo down below-
Ok....therefore segmentation is vital step in marketing process. But how to divide the whole market? There should be some basis for that.
Yeessss .....basis. We will understand the 5 bases, but before that let's see Importance/ Needs of Market segmentation.
What is Market segmentation? Meaning, Definition, Importance/ Needs, Bases, Advantages/ Benefits.
2. Importance of Market segmentation. Needs of Market segmentation.
Importance of Market segmentation states the reasons of doing segmentation. Why companies should divide the market into segments on different bases?
1) Enhanced awareness about market
Market segmentation helps organization to know more about market in a better manner. It enables organization to know about every segment of market, what they want, their behaviour, their culture, language, taste & preference etc.
2) Optimum utilization of resources
Market segmentation helps company to have valuable informations about market & consumers. That's why, there is less chance of wastage of any efforts & resources. That leads to optimum utilization of all resources.
3) Better focus on Customers
Market segmentation is vital for effective performance because it helps to focus on customers of one segment. Company can identify and satisfy customers needs of a particular segment in a better way.
4) Competitive advantage
Market segmentation is also important function for companies as it gives competitive advantage. Companies can perform more efficiently than competitors, which provides extra edge in the market.
5) Better communication
When company understands their target market, segment, it helps them to enhance their promotional efforts. It also leads to increase in market share easily. Company can retain more customers and also gain new customers.
6) Market Expansion
Without knowing the needs & wants of other segment, it will be difficult to satisfy them profitably. So, Market segmentation helps organization to understand different segments. This aids organization to expand their business beyond one market.
What is Market segmentation? Meaning, Definition, Importance/ Needs, Bases, Advantages/ Benefits.
3. Bases for Market segmentation.
There are different Bases for Market segmentation, and on those bases, companies divide the market into segments. Following are 5 Bases for Market segmentation:
(1) Geographical base
So, this is the first. In this basis for Market segmentation, companies try to divide the market local, regional, national, international and like that. Now Examples give you the practical knowledge. E.g. McDonald's products in India don't include beef because in Hindu culture Cow is a holy mother for them.
(2) Demographic base
Here in this basis for Market segmentation, companies divide the market in Age, Sex, Education, Language, Religion, etc. E.g like I said, Amul for kids, for Women, for youth.
(3) Socio - Economic base
On this base, Market is divided in Social class, Cultural background etc. Like upper class, middle class. E.g. South Indian restaurants differentiate their dishes and services from Northern Restaurants.
(4) Psycho-graphic base
This base of segmenting Market divides buyers according to Life style, Personality traits, Social status, etc. E.g. Different types of Cultural clothings. India has many types of cultural styles.
(5) Behavioural base
This base is divides according to behavioural factors like how they react about the product, their Perception, Loyalty, Attitude, etc. Many companies customize the product because they take orders from customers personally.
Yaayy... Now understand the Advantages of Market segmentation
What is Market segmentation? Meaning, Definition, Importance/ Needs, Bases, Advantages/ Benefits.
4. Advantages of Market segmentation. Benefits of Market segmentation.
(1) Market segmentation helps to Utilize all resources optimally. Because all efforts will be according to the specific group of customers.
(2) It facilitates better services to customers as they get more Customized products and specific pricing strategy.
(3) Chances of Customer satisfaction will be high because of customization. This will enhance customer loyalty and value.
(4) Appropriate adjustment of marketing mix will be there because, companies can make specific strategies for specific segment of market.
(5) It will facilitate Appropriate Distribution strategy for each segment of customers. It will increase effectiveness and efficiency.
(6) Better performance will lead to Increase in sales and Expansion of Business.
Related articles:
1. What is Marketing? Meaning, Nature, Functions, Scope, Benefits, Concepts.
2. What is Customer Value and Customer Satisfaction in Marketing?Summary
So, fistly we did the meaning of Market segmentation. In which we saw definition given by Philip Kotlar,"The act of dividing a market into distinct group of buyers who might require separate products and/ or marketing mixes."
Then we saw the importance of Market segmentation. Following are the points for quick revision:
1.Enhanced awareness about market.
2. Optimum utilization of resources.
3. Better focus on Customers.
4. Competitive advantage.
5. Better communication.
6. Market Expansion.
After learning Importance/ Needs of Market segmentation, we moved on to different Market segmentation Bases. Following are the Bases:
1.Geographical base.
2. Demographic base.
3. Socio - Economic base.
4. Psycho-graphic base.
5. Behavioural base.
Then we learned some advantages/ Benefits of Market segmentation. This completes this talk about Market segmentation. I have enjoyed this learning time with you. You can also comment about this post or give any suggestions about improvement. I will keep talking with you like this time to time and try to share my Knowledge and experience. Thank you for Talking (Reading) with me.
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