Market segmentation is known to be an important business growth strategy. It is defined as the division of market into smaller and specific groups that are homogenous but different from other groups.
Levels of Market Segmentation
There are three levels of market segmentation i.e.
- Mass Markets: When the demand of the customers is alike then a company can access a homogeneous approach to target the market as a whole to entertain with a single product or service. But considering the customized needs of customers these days, very few products are being offered like this.
- Segment Markets: This is a segment of the market that has distinguished demands differing in their perceptions, needs and behaviors from other groups.
- Niche Markets: These are the sub groups within the segments. Niches can be defined as segments that are identified on the basis of a divining a segment in to sub segments.
Benefits of Market Segmentation
Most prominent features of market segmentation are as follows:
- Trends in the changing environment are identified in no time
- Products and brands are designed in order to meet the unmet and true demands of the customers
- By selecting the niche, firm faces lesser competitors
- Selection of the distribution channels becomes easily accessible
Markets can be segmented in different types. Keeping in view the given product or service, marketer decides that which strategy will complement the product or service in the best manner. While segmenting, the marketer answers where, who, why, how; questions. Let us see how markets are segmented:
Geographic segmentation (Where):
It is the division of market based upon the geographical units like countries, counties, regions or even neighborhood. In this way the marketer gets quick information about the consumers in an enclosed area. Its benefits are as follows:
- Quick general idea of similarities and differences between the customers according to the geographical units
- Identification of cultural differences
- Climatic differences
- Language differences