Technical articles Flashcards
Why is market segmentation important?
Segmentation of an organisation’s market is the foundation of a successful marketing strategy. Instead of using a ‘one size fits all’ approach to marketing campaigns, use of a tailored marketing mix, designed to suit more individual customer needs, should help to drive a more personalised, relevant and a more effective marketing message which is more efficient in terms of time, money and resources. Organisations which understand that their customers have individual needs, preferences and behaviours, are better able to develop stronger relationships with customers and therefore, importantly are more likely to retain them.
How is market segmentation different from customer segmentation?
Market segmentation involves splitting a market into segments and developing different strategies for those segments. Uses :
- planning
- pricing strategies
- assist in efficient buying
Customer segmentation is the same basic idea as market segmentation, except that the scope is limited to the organisation’s own customers.
Customer segmentation involves breaking down an organisation’s customer markets into homogeneous groups, each of which will react differently to pricing, promotions and other elements of the marketing mix. Each customer segment identified should be targeted with an individually designed marketing mix.(based on data held in an organisation’s own internal databases)
What are the types of market segmentation?
Demographic:
- Age, gender, marital status
- Income
- Occupation
- Nationality
- Ethnic group
( Easiest form of segmentation : information is easy to gather and is relatively inexpensive to obtain. it is most often used together with another type of segmentation to help narrow the target market even further)
Behavioural
- Frequency of product/service use
- Brand loyalty
- Transaction behaviour (such as price sensitivity)
- Online shopping behaviour and habits
(assists organisations to understand how a customer interacts with the product/ service, meaning that it can target them more effectively by knowing how they are likely to react towards product/service or marketing message)
Geographic
- Country or region
- Rural or city based
(highly effective form of market segmentation. Understanding the location of a customer can help an organisation understand customers’ needs. Understanding regional differences driven by factors such as culture, climate or language can allow for a more targeted marketing message.)
Psychographic
- Social status
- Personality
- Lifestyle
(focuses on the emotional or psychological behaviours of customers, where customers are grouped according to values, personality traits, attitudes, lifestyles and interests. This gives an organisation useful insight into customers’ needs and preferences. Organisations will often combine demographic and psychographic customer analysis when undertaking customer segmentation, in order to develop a richer and fuller picture of their customer segments.)
What are the benefits of market segmentation?
Satisfy customer needs
Targeted communication (highlight the features which are most relevant)
Improve competitiveness
Improve focus
Improve marketing efficiency
Customer retention
