Consumers are not the same for every market and product, and marketers long realize this. There are different categories and gender, location, attitudes, age, needs, and any social factor.
Some people categorize the segmentation as science and some as arts and place them in groups. Sellers use the concept of segmentation to sell their products and even their services.
What is a Target Market?
A target market represents a group of potential customers who will most likely buy a company’s products or services. The target market’s customers can be individual consumers or organizations.
What is market segmentation?
Market segmentation represents the process of creating customer groups by dividing the target market into more defined categories.
Suppose we say that sellers or businesses sell their products to every consumer; that would be wrong because consumers’ categories hardly consume some products. So, on a realistic basis, products have their consumer classes as well, and those classes can be varied in terms of age, Income, gender, and needs.
If an Iranian company wants to sell their fine handmade carpets, only a few people with a good income, and probably those who own the houses, will buy the carpets. Not all classes will take the initiative.
For this reason, companies and sellers do their complete research to identify what their target market is and which class of consumers will buy their product and why they will be the product. The target indicates their aim, and the market says the consumers. There are several major classes of the target markets.
Examples of target markets are:
- Male who drives a car
- The older woman that owns a home in Florida
- Criminal Law firms in Ohio
- Single people in the city
How the Target Market was Segmented In Business?
Target Market can be segmented into seven steps:
- Step 1: Review of Audience Information.
- Step 2: Decide Whether to Segment.
- Step 3: Determine the Segmentation Criteria.
- Step 4: Segment Audiences
- Step 5: Decide which Segments to Target.
- Step 6: Assess the Proposed Segments.
- Step 7: Develop Audience Profiles.
Since the catcher wants to catch the specific fish, he will throw the particular lure according to its size and design to see it. Similarly, when companies want to have their target market, they throw the lure ( product) according to the consumer class’s demands and needs. Only then will they respond to the advertisement, and the other might be indifferent or repelled by it.
Why is market segmentation an essential variable in strategy implementation?
Market segmentation allows a small firm to compete successfully with a large firm, allows a firm to operate with limited resources, and market segmentation decisions directly affect marketing mix variables.
It is essential that your product’s message (advertisement) reach your consumers more effectively and efficiently in the business market. To shape the news, you need to know about your customer’s needs and demands or values. This will help a lot more than to advertise.
How does Mcdonald’s segment its market?
McDonald’s segments market dividing a large group of people into different groups of customers, with each has the exact needs and demands. For example, Mcdonald’s is the name of the burger-making restaurant, and it’s super in its marketing because of the marketing strategies they adopt. Mcdonald’s sells its vegetarian burgers in India since the people’s demand was more to veg section. The same Mcdonald’s sells its burger with seafood patties in Bangladesh since people like to eat fish more.
4 Types of Market Segmentation
- Demographic segmentation
- Behavioral segmentation
- Geographic segmentation
- Psychographic segmentation
Segmentation of this way helps sort out the large group of the market divided into smaller categories, each with specific characteristics and certain behaviors.
What is Demographic Segmentation?
Demographic segmentation breaks a market into segments through age, Income, gender, race, education, religion, social class and nationality, and family size.
Demographic Segmentation Explanation:
In this life and age cycle segmentation category, the consumer is identified as a potential customer based on age. Let us say if there is a couple in their 50s. They tend to have their interests according to their age, and they won’t buy diapers anymore. So this example defines the market segment of demography. You need to target your market according to their needs, and in these segments, you will come to know about their needs and demands by their age.
Young ladies would be more interested in buying fashionable and fancy clothes rather than buying dull colors.
Gender segmentation This market segment defines the needs and demands of the consumer based upon their gender. For example, m.a.c is not popular among men since it is a cosmetics brand. This example goes well with other cosmetic brands as well. There is a massive difference in the choices of both genders. After age, gender defines the buying behavior of the consumer well.
Social class and income segmentation Income can be a fair market segment to define the potential consumer’s buying behavior since a BMW is not for the social class under the labor. There are many examples, but Income is not treated as a vital market segment to define the target market since many people look at money differently. For example, not all middle-income earners are well reserved and save their money, and not all high-income earners spend their money.
What is Geographic Segmentation Practical Examples
The geographic segment describes the target market as it decides them into different subgroups based on the area they are living in. So this can be a significant impact on the target market since the area and the surroundings have a deep impact on individuals. So it can shape the decisions and buying behavior of the people.
The geographic segment of the market nearly defines the buying behavior and social class of the society. Still, let’s only go with geographic segmentation. That won’t be as effective and would be assumed as a wrong assumption in business – so people around who are sellers in the market try to comprehend the complete research with the combination of geographic and demographic segmentation to study the customers buying behavior.
What are Behavioural Segmentation Examples?
The behavioral segment in the market defines the buying behavior pf the people or group of people, when they are trying to buy something new in the trend lets, say the Apple releases its new iPhone and want to see if in some of the specific area people would be interested in buying or not. This will tell a lot about people’s class and their behavior towards purchasing a new thing or to buy something new, or maybe they are more interested in purchasing those of the products that are gone mainstream.
Behavioral Segmentation Occasions: Timings play their role and impact the people’s buying behavior around them. This is so as like, people buy jackets mostly in winters and swimsuits in summers. People buy mainly in the end seasons where they can get the things at a discount price, and most of them believe in the year-end where they can buy with their bonus money.
So buying does have its timings in people’s So this. This is to be considered as one of the segments to know about the target market.
Behavioral Segmentation Benefits: Benefit segmentation breaks the market into segments and identifies what customers look for in the products they buy.
Behavioral segmentation Brand loyalty in customers: brand loyalty is a factor in buying behavior. Many people are incredibly loyal to a specific brand and buy all those products that that brand new releases. Others are dedicated to two-three brands at a time and find their product alternatively.
Psychographic segmentation allows marketers to understand the motivation behind a buying decision, such as personality profiles and lifestyle profiles. Examples of psychographic segmentation products can be organic food, expensive watches, luxury mobile-manufacturing brands, etc.
For example, the expensive watch is not created for each person or every class. So in marketing, you need to do particular Psychographic segmentation and target unique profiles of people.
The psychographic segmentation is pretty a difficult one for the marketer to apply to different markets. Some big companies go for this research on the need to find their target market, and they are more actively seeking the answers to these questions, as explained above. These questions prove how your potential customer would be attracted to your product based on their personality concerns.
Since these answers are not open and one has to go through much research and surveying to achieve the actual data and not the remote data work for the big market, getting the big data is the ultimate goal. There are many types of research to get the data, and some are based on the assumptions that people who use Facebook and the kind of post they upload define more about their personalities. The pages they liked and the comments they wrote says a lot.
This type of research and getting data through such means are more prone to errors and less effective. The data collection to find the potential target market should be more authentic to use for business.
Market segmentation quiz
Which of the following statements about market segmentation is true?
A hospital marketing manager can segment the market by:
A. The portfolio of products or services offered
B. Choosing a select group of customers
C. The characteristics or needs of various groups
D. All of these is correct
The right answer is: D. All of these are correct.
Which consumer market segments are the best match with Benihana?
Benihana, an American restaurant company that franchises 116 Japanese cuisines, targets middle-income business people and the upper-middle class. As a result, Benihana’s business market segmentation is well done.
When a market segment is large or profitable enough to serve, it is termed substantial.
What is labor market segmentation?
Labor market segmentation represents market segmentation by occupation, geography, and industry.
Which of the following are b2c marketing segmentation?
c) Product-use based
The correct answer is Psychographic because business to consumers (b2c) segmentation uses Behavioral data, Geographical data, Demographic data, and Psychographic data. When B2C markets divide the potential market according to values, attitudes, and lifestyles, they use psychographic segmentation.
A segment is less attractive if it:
A) It is difficult for new entrants to enter
B) is substantial
C) is actionable
D) already contains many strong and aggressive competitors
E) contains weak suppliers
The correct answer is for D because: A segment is less attractive if it already contains many strong and aggressive competitors.