An Introduction to Market Segmentation
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- Market segmentation is the process in which a single market is divided into sub markets or 'segments'
- Each segment represents a slightly different set of consumer characteristics
- Firms often segment their markets according to factors such as geographical location, demographics, behavior and lifestyle, age or gender
Businesses can choose to segment markets in a variety of ways
- A market for a product such as crisps is not simply seen as one market e.g. the crisp market is divided up into many market segments such as
- Dinner party snacks (Walkers Sensations, Pringles, Burts) are targeted at middle to upper earners/professionals with a premium price
- Health conscious crisps (Walkers lite, Walkers baked, Revita lite) are targeted at the health conscious market
- Lunch box value snacks (multipacks, hoola hoops etc) are targeted at families and the mass market
The Advantages & Disadvantages of Market Segmentation
Advantages
Disadvantages- Recognises that consumers are not all identical; consumer groups do not all share the same tastes and preferences
- Not everyone within a segment will behave in the same way
- Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely
- It may be difficult to identify a segment and consumers can belong to multiple segments at the same time
- Less expensive and wasteful than marketing products at wide market segments
- Segmentation requires more detailed market research, which can prove costly but beneficial to the business
- It may increase loyalty if the consumer feels that their needs are being met, which can lead to repeat purchases
- A segment may be identified but it may be too small and unprofitable to cater for
- Market segmentation is the process in which a single market is divided into sub markets or 'segments'