Marketing Segmentation and Targeting - Essay Example

Marketing Segmentation and Targeting A market, in contemporary terms, is defined as place where both buyers and sellers come to meet with the objective of exchanging of goods or even services. In this text, the general definition of a market is group of both people as well as businesses with a clear interest, purchasing ability and willing to spend some money to get the goods or services to satisfy their specific needs. Market segmentation is the grouping of customers who may be individual or corporate into a pool of customers with similar demands (goods and services) in terms of prices and designs. It can also be termed as a marketing strategy where a large market is divided into various subsets according to the customers’ demands. A good market segment should be homogenous meaning all customers in a specific segment would prefer a common product quality. on the other hand, buyers from different segments are expected to have different products and services tastes. However, all these should yield much returns. The term can also be described as grouping customers with similar needs and charged differently from other groups or segments. Statistical analysis is done on some characteristics to come up with a certain market segment. Among the characteristics are the customers’ location, price, income, religion, and gender. Market segmentation is a business strategy upon which other marketing decisions are based. It needs a good management commitment towards customer related planning and research then ensuring implementation of the findings as well as their control. Requirements of a good market segment are highlighted below. It should be easily differentiated from others in terms of the customers’ demands. Secondly, it should easily be reachable in terms of communication as well as distribution routes. The segments should be of a considerable size to fully utilize the resources needed to sustain them. In addition, the segments should be unique from each other meaning each should correspond differently to different market conditions. Lastly, the segments should be durable to reduce the costs related to frequent alterations. Market groupings can be done on industrial market basis as well as consumer market basis. The consumer market approach considers some four basic bases. The first is the geographic segmentation which is determined by various regional variables like nations, neighborhoods, climate, and rate of population growth as well as the population density. Demographic segmentations consider age, level of education, income, status of family, occupational factors, and the customers’ gender. Psychographic market grouping is making use of psychological science to know customers well and is based on the attitudes and the general customers’ lifestyle as well as values. Finally, behavioral market differentiations is done according to the rates at which the customers use the goods or services in question, price sensitivity, how loyal the customer is to a certain brand, as well as the benefits attained. The greatest purpose of market segmentation is to enable sales activities to put more emphasis on a certain market segment with the highest chances to buy the products or services. If properly done, higher sales will be realized. In other perspectives, it is aimed to improve business or company’s competitive nature as well as serve the customers in a better way which translates to better output such as sales increase, better market share, and a good business image. Other benefits of this market strategy is to get to the bottom understanding of the customers’ needs and this translates to improvement of a company or business in general. This confers on the business a competitive advantage due to the better services offered to the grouped customers. The other advantages are that the goods or services termed as responsive could be designed to satisfy the wants of a certain market place. Secondly, it can be used to decide on effective costs and creating awareness on a certain business. In addition, it assists a company or business decides on their place of market and how the customers perceive it. Through doing this, the company can adjust its market strategies to serve the grouped customers well thus leading to increased output. The reason for doing market segmentation can be summarized under four main aspects. These include responsive products designed to satisfy the wants of a market place and deciding on the best or efficient cost. In the promotional tactics as well as campaigns, it can help the company gauge its market position by giving the perception of customers about the business. This strategy also helps the company or business adjust to other marketing strategies at the current prevailing circumstances. To achieve a certain market segment, three basic steps are followed. These are segment identification where a given number of uniform market segment is determined according to some variables and criteria; certain grouping should be customer oriented, of manageable size, can be differentiated from other segments, reachable in terms of communication and distribution routes, and should enable the company make profit. The next step is market selection where a group/groups are targeted for a specific business activity because it would not be economical to explore the whole market hence it would be wise to consider specific choices according to customer needs, objectives of a specific cooperate, as well as your companies’ technical, monetary, and marketing resources. The final step is positioning where a company carves out a specific market trait and emphasizes on the niche by looking for a unique marketing benefit and being keen on segments omitted by other competitors as well as providing solutions to problems posed. A company’s positioning can be real. This is in terms of subsidized cost, improved quality, factual or conceptual. For instance, a good company image is important in gaining competitive advantage. Despite the benefits of this market strategy, it also has its drawbacks. For instance, concentrating on a certain group or class of people may lead to the neglect of others and this could reduce sales. Other companies or businesses may take advantage of the neglected group in view of satisfying their needs. That way, they would gain leverage in terms of beating competition. Over concentration on a certain segment may lead to growing of the segment such that its handling in terms of business and distribution becomes a problem. Market segmentation and market targeting are related business strategies. Target marketing is the breaking of entire market into segments then putting more efforts on certain segments. It is majorly applied to small scale businesses. Target marketing has several benefits. For instance, it eases promotion, product distribution, price determination and it is also cost effective. Once the specific customers have been known, a market strategy can be formulated in terms of distribution of products, its promotion, as well as pricing to meet the demand of the target market. A target group is attained after market segmentation is done through geographic, demographic, psychographic, and behavioral segmentation. The basic strategies to satisfy the target markets include undifferentiated marketing also known as mass marketing, the differentiated marketing, micromarketing or niche marketing, and the concentrated marketing. Mass marketing is a strategy where a business ignores the differences in the market segments and approaches the entire market with a common offer. It is majorly adopted when trying to sell a product on persuasion basis to a bigger/broad audience. The basics are to enable a large group of people through message broadcast. It uses radio, newspapers, or television to reach the wider audience. Direct marketing, on the other hand, is used by sales teams to get to the target markets through their contacts. For example though emails or even phone numbers. However, it’s important to check the laws of direct marketing in the country where the business is to be carried out. The basic concept, in relation to target marketing, is the targeted loyalty to the brand or portrayal of a recommendable affection to the brand in question. The strategy of market targeting enables the sales team to communicate to their target groups in a manner that is focused. Research indicates that ethnic identification and ethnic salience among other psychological traits enhance positive outcome when it comes to target market. Target markets are made from consumer or buyers’ point of view on the similarities between advertisement aspects. Market targeting needs a concrete understanding of consumer/buyer wants and how well such products can meet their needs to boost the business outcome. The benefits that comes as a result of target marketing include, for instance, a businessman getting to the bottom of his/her clients needs. Consequently, such a business person would concentrate on products preferred to ensure fast movement of the goods hence increased sales. Market targeting enhances cheap and faster communication to a specific target. In addition, finding a market is simplified after knowing a specific target since one can even partner with other premises that offer same goods and services. Market targeting makes it easy to decide who to be your clients. Adding more targets is easy provided the marketing strategy is operational and adhered to. In conclusion, both the marketing segmentation and targeting are correlated strategies aimed at focusing more on specific market or customers’ categories to ensure increase in sales and profit. Bibliography Arndt, J. Market segmentation:theoretical and empirical dimensions. Berlin: Universitetsforlaget, 2004. Belohlavek, P. Introduction to Unicist Market Segmentation. New York: Blue Eagle Group, 2007. Croft, M. Market segmentation:a step-by-step guide to profitable new business. London: Routledge, 2004. Weinstein, A. Handbook of market segmentation:strategic targeting for business and technology firms. London: Routledge, 2004. —. Market segmentation:using demographics, psychographics, and other niche marketing techniques to predict and model customer behavior. New York: Probus Pub, 2004. Read More