Defining Market Segments: Micromarketing Strategies
Market Segmentation and Micromarketing
Market segmentation involves using micromarketing, where firms adjust their programs to the needs and desires of precisely defined market segments (geography, demographic, psychographic, or benefits).
The final form of market segmentation is individual marketing (marketing by one), where the firm adapts its product or program for the needs of a specific consumer or organization.
The Rise of Micromarketing
The year 1990 became known as the “age of supersegmentation” or micromarketing. Having products and services of high quality is just not enough. Companies must meet different consumers, who can choose from many product offerings in the market.
Micromarketing means knowing your customers, giving them what they want, using targeted promotions (such as special interest magazines and sponsoring events), and building strong relationship channels.
Bases for Market Segmentation
There is no single way to segment a market, but the most common bases are:
Geographic Segmentation
Geographic segmentation requires that the market is divided into different geographical units such as countries, states, regions, counties, cities, or districts. A company can choose to operate in only one or a few geographic areas or operate in all, but giving different geographic areas special attention in terms of needs and preferences.
Demographic Segmentation
Demographic segmentation is dividing the market into groups based on demographic variables such as age, sex, family size, family life cycle, income, occupation, level of education, religion, race, and nationality. When the same market segments are, in principle, defined using other variables such as personality or behavior, their demographic characteristics must be known in order to identify the market size and reach it efficiently.
Psychographic Segmentation
Consumers are divided on the basis of different social class, lifestyle, or personality characteristics. People in the same demographic group can have many different psychographic profiles.
Behavioral Targeting
Consumers are divided into groups based on their knowledge, attitudes, usage, or response to the product. Many marketers believe that behavioral variables are the best starting point to define segments.
Requirements for Effective Targeting
For effective targeting, it is necessary to define attractive segments. The mere fact that a market segment is currently underserved or poorly served is not enough. We must consider four additional conditions:
- Measurability: The degree to which segments can be accessed and serviced.
- Accessibility: The degree to which the segments are large or profitable.
- Actionability (Operation): The degree to which an effective program can be designed to attract and meet the chosen segments.
Segmentation Research
A strong weapon for market segmentation is segmentation research, which aims to analyze markets, find niche opportunities, and capitalize through a superior competitive position. This can be achieved by selecting one or more groups of users as targets for marketing activity and the development of programs to achieve these markets of unique potential consumers (market segments).
Segmentation is an approach that lies between mass marketing and individual marketing.