Target Marketing and Segmentation
Dolnicar, Grün, and Leisch define target marketing and segmentation as a technique that entails the breakdown of a market into small and manageable segments that allow an entrepreneur to focus their marketing attention on a single or a few critical sections. Usually, such sections comprise clients and consumers whose desires and needs have a close similarity to entrepreneurs’ services and products. Target marketing is primarily meant to enhance the success of a business, increasing sales, and attracting new customers and markets. This paper explores the characteristics, importance, some successful marketing criteria, standard bases, and strategies used in marketing segmentation.
Characteristics of Markets and Market Segments
The fundamental principle of marketing lies in the desire to satisfy consumers’ wants and needs. Business marketing operates on the notion that consumers have the ability and a staggering willingness to influence their needs and demand to purchase a particular product or service. Hence, entrepreneurs must use different marketing techniques to lure consumers and convince them to buy their products (Adams, n.d.). However, effective markets and market segments must satisfy the following characteristics: they must be accessible, measurable, profitable, and must be responsive to the demands of consumers.
An open market and market strategy is that which presents little or no economic and geographical barriers to customers who intend to purchase goods and services from the market segment in question. A measurable market and market segment is one whose consumers are identifiable and can be quantified in terms of population, age, and income brackets (Adams, n.d.). Thirdly, profitable market segments are usually large enough to warrant pursuing. This defines the main reason behind tailoring marketing approaches towards particular market segments because it enables businesses to fulfill consumers’ needs as well as enjoy economies of scale. Last but not least, market responsiveness is a characteristic of an effective market and market segmentation, which ensures that consumers and customers are responsive to the goods and services offered in the market.
Importance of Market Segmentation
Market segmentation is not only meant to benefit businesses but it should also be designed to help customers. Some of the importance of market segmentation to customers includess creating an avenue that facilitates the provision of a great variety and choices of products and services, as well as providing goods and services that closely match the needs and desires of consumers (Oxford College of Marketing, 2019). On the other hand, market segmentation enables a company to formulate better and more effective marketing planning because it is possible to predict the reactions to marketing activities. Secondly, it helps firms to determine prospective clients who high potential to purchase their products. Segmentation also brings organizations closer to their customers, which, in effect, enables them to know and understand their demands and produce customized products that best suit and meet consumers’ needs. Thirdly, segmentation gives sales and marketing a close focus, which translates to higher profitability, reduced operational costs, and more sales (Oxford College of Marketing, 2019). Organizations can efficiently allocate budgets to segmented markets based on the potential return on investment needed.
Criteria for Successful Marketing Segmentation
A successful marketing segmentation should meet the following requirements: firstly, the approach should ensure that marketing efforts in a segment are accessible to all members and customers within the market segment (Chand, n.d.). Secondly, the market segment should be measurable and identifiable in that the potential profit, size of the section, and other relevant aspects of the market must be measurable and identifiable in terms of data. Thirdly, the market segment must be substantial, with a large number of potential customers should the business be set up (Dolnicar, Grün & Leisch, n.d.). This helps to generate the organization’s expected returns since market segments with relatively small populations may give misleading and biased results. The unit also needs to be large enough to warrant segmentation. This also serves as a rationale to justify the economic separation of marketing practices.
Common Bases Used to Segment Consumer Markets
The standard bases used to segment consumer markets include geographical, demographic, behavioral, and psychographic segmentation. Geographic segmentation is a technique that entails partitioning of a market into geographical groups such as cities, regions, states, or nations. For instance, Print Media may publish newspapers in different languages to cater to the demands of customers in different countries (Dolnicar, Grün & Leisch, n.d.). Demographic segmentation, on the other hand, uses such variables as race, religion, gender, age, education, family size, occupation, income, and nationality to divide a market into small and sizeable units. Demographic aspects are the most commonly used elements in the market to divide consumers into segments. Thirdly, behavioral segmentation is a strategy that divides buyers into units according to their response to, use of, attitude towards, and knowledge of the product in question (Chand, n.d.). This technique uses the basis of orientation, consumer-readiness stage, loyalty status, user status, and occasions. Psychographic segmentation entails the personality and lifestyle traits of consumers which predominantly influence consumers,’ purchasing habits of certain products.
The Strategies for Selecting Target Markets
Some of the strategies that can be used to select target markets include using social media to estimate the potential targets; and collecting data from the available and prospective customers. Other approaches include evaluation of competitor activities, positioning and brand identity, use of pricing as a tool to position in the market, messaging and promotional strategy, and product design and repositioning (Herman, 2019). Firstly, social media is a useful tool that businesses use to select their target market because it presents a platform that directly links consumers and sellers. This enables the latter to figure out the likes and dislikes of the former. Besides, social media also serves as an avenue to gather data and information regarding potential consumers. Secondly, evaluating the competitors’ targeting practices enables an organization to understand both the weak and appropriate segments to position in the business and yield an optimum return on investment (Herman, 2019). Thirdly, pricing is another strategy that a firm can use to select the target market by deciding to either cater to a few consumers by using relatively higher prices than the market price or sell to a vast population by selling products at a relatively lower price.
References
Adams, D. What Are the Characteristics of Market Segments & Target Markets?. Retrieved 31 October 2019, from https://smallbusiness.chron.com/characteristics-market-segments-target-markets-22601.html
Chand, S. 11 Criteria for Effective Market Segmentation | Marketing Management. Retrieved 31 October 2019, from http://www.yourarticlelibrary.com/marketing/11-criteria-for-effective-market-segmentation-marketing-management/22180
Dolnicar, S., Grün, B., & Leisch, F. Market segmentation analysis: understanding it, doing it, and making it useful. Singapore: Springer.
Herman, C. (2019). 3 Main Activities of Target Marketing. Retrieved 31 October 2019, from https://yourbusiness.azcentral.com/3-main-activities-target-marketing-12505.html
Oxford College of Marketing. (2019). The Importance of Market Segmentation | Oxford College of Marketing Blog. Retrieved 31 October 2019, from https://blog.oxfordcollegeofmarketing.com/2014/07/30/cim-new-syllabus-focus-the-importance-of-market-segmentation/
