In marketing strategies, we will find the term market segmentation . This market segmentation is one of the important instruments that needs to be discussed and understood in economics, especially marketing. Because, through this market segmentation, marketing strategies can be more successful. In the end, sales and profits achieved by the company can be more leverage.
Chapter List ☰
Understanding Market Segmentation
The simple definition of market segmentation is the division of a heterogeneous market into homogeneous units of buyers, where each unit of homogeneous buyers is used as a target market to be achieved with its own marketing mix strategy .
That is, it can also be understood that the original market was one and very broad. Then, this broad market is divided or segmented by marketers, into several parts of the market that have a homogeneous nature. Regarding this market homogeneity, marketers can determine based on their own needs.
Market segmentation as a corporate strategy is not merely done by differentiating products or even creating new products ( product diversification). This market segmentation is carried out on the basis of differences in consumer interests and needs.
Market segmentation becomes part of the philosophy of product marketing that argues for consumers or buyers. Market segmentation by this company plays an important role in efforts to improve product marketing in a directed manner. In addition, the company’s resources can be used more effectively and efficiently.
The Purpose and Objectives of Market Segmentation
By segmenting the market, of course, a company has certain goals and objectives. The purpose and objectives of market segmentation, namely as follows:
1. The market is easier to distinguish
Humans as consumers are unique and interesting creatures. Consumers have tastes and types of products that always develop continuously. Therefore, one company alone is certainly not possible to fulfill all the desires of these consumers.
Therefore, companies will tend to choose a group of consumers with homogeneous properties. Thus, this consumer group will be more easily understood and fulfilled their tastes. That is, one market with other market groups can be more easily distinguished.
2. Better customer service
Market segmentation is done so that companies can provide services that lead to their markets. To meet their needs, consumers will always want: good quality goods, affordable prices and good service as well as satisfying and punctuality.
This consumer desire must be understood properly by the company, especially the most dominant desire, namely the matter of service. Service issues can be a special attraction for consumers, such as the provision of free inter-service facilities, free and large parking spaces and others.
When companies understand the desires of consumers in the intended segment, then the services provided can be better.
3. A more directed marketing strategy
Companies will experience difficulties in serving heterogeneous and broad consumers. Therefore, through market segmentation, companies can serve homogeneous consumers. Thus, the planned marketing strategy can be more directed.
The company will be easier to compile a marketing mix that includes product planning, price, distribution and promotion so that it becomes sharper. With market segmentation, management can be more assisted in directing funds and efforts towards potential markets that are considered the most profitable.
Because the target is clear, in planning products that can meet market demand and the most appropriate ways of promotion will also be more easily determined.
Benefits of Market Cementation
By segmenting the market, a company can get many benefits, such as:
- Companies can apply marketing ideas more clearly.
- The company will be able to manage its products better.
- Companies can find and compare market opportunities.
- Companies can classify the budget that is owned appropriately.
- Companies can create attraction in the field of marketing.
- The company will be in a better position.
Market Segmentation Requirements
Market segmentation as a marketing strategy can indeed be determined solely by the company. However, in the process of determining it can not be arbitrary. In order for market segmentation to be carried out effectively and efficiently, there are market segmentation requirements that must be met.
Market segmentation requirements, including:
1. Must be Measurable ( Measurable )
Market segmentation must be measurable , both in size and breadth, and the purchasing power of the market segment. For example, a measurable market segmentation is that a consumer buys a fashion product because he is interested in his design or model.
2. Must Be Implementable ( Actionable )
Market segmentation must be implemented. That is, all marketing programs that have been prepared can be implemented and can serve market segments effectively and efficiently.
3. Must Be Reached ( Accessible )
Market segmentation must be achieved well. Thus, market segmentation that has been made by the company can be used as a target market ( target market ).
4. Must be Enough Area ( Substantial )
Market segmentation does make the initially broad market narrower. But, that does not mean the market group has become very narrow. The homogeneous market must still be broad enough so that it can benefit the company when the market group is served by the company.
From the market segmentation requirements above, it can also be concluded that these requirements must be able to help a company to be able to assess the market viability of a product to be segmented or not.
Transfer of Mass Marketing Towards Target Marketing
The company certainly has realized that its products will not be able to attract the attention of all existing consumers. Because, there are so many consumers and are scattered in various regions with rapidly changing tastes. Plus, there are many competitors who are also trying to attract consumers with similar products.
Therefore, companies must be able to get the most profitable position in serving consumers by identifying the most attractive segments to be served effectively.
It also means that the company is shifting mass marketing and differentiation product marketing to target marketing. The stages of the transfer of mass marketing towards target marketing are carried out by:
1. Bulk Marketing
Mass marketing is a marketing that is characterized by mass producing, distributing and promoting a product to all consumers. The product being marketed is single, with the hope that this product can meet all the desires of consumers while saving costs.
This mass marketing strategy is not widely used by companies. Some companies that still use mass marketing are generally companies with limited consumers.
2. Marketing of Differentiated Products
In marketing differentiated products, the company tries to identify certain groups of buyers. How, the company divides the market into two or more segment groups. Each segment is offered a different type of product with other groups.
Distinguishing products can be in various forms, such as the quality, color, size, model, packaging and so forth. For example, originally Aqua mineral water only produced mineral water intended for all people. At present, Aqua differentiates from packaging, taste and size.
3. Target Marketing
In marketing this target, the company will focus its marketing efforts on only one or a few specific market cement groups. This target marketing strategy is carried out by developing products and differentiators, while at the same time mixing the product, price, distribution and promotion only for certain groups.
Now, many target marketing strategies are carried out given the increasingly high level of competition. Market and consumer conditions that are so complex now do require product differentiation.
Product differentiation is one of the important points in a market segmentation. Philip Kothler, a marketing expert stated that the strategy for product differentiation can be done in several ways. How to do product differentiation, according to Philip Kothler, namely:
- Products, which can include: features, specifications, colors, designs, performance and others.
- Service, which can include: speed, convenience, delivery service, empathy and others.
- Distribution channels, which can include: forms of distribution channels, breadth of distribution, seller’s capabilities and others.
- Human resources, which can include: work culture, skills and others.
- Company image, which can include: brand, logo, character association and others.
In addition to Philip Kothler, another marketing expert, Rosabeth Moss Kanter also has her own opinion about efforts to differentiate products. This product differentiation step according to Rosabeth Moss Kanter can be done with three main assets of the company, namely:
1. Concept ( Concenpt )
The concept is the ability of a company to generate ideas and innovations through continuous innovation efforts.
2. competence ( Competence )
Competence is the ability to carry out the process of providing added value to customers by producing certain standards of increasing competence.
3. Connection ( Connection )
Connections are the ability of companies to collaborate with partners or associations.
Basic Market Segmentation
To do market segmentation, it can refer to the basis of market segmentation which can include basic demographic, geographical and psychographic tests.
The basis of market grouping based on demographics, is related to population factors. Demographics become the basis of segmentation, for several reasons, namely because (1) population problems are easily measured, and (2) the needs of consumers or buyers are closely related to population variables.
Forms of segmentation that can be done based on demographics can include: gender, age, education, bases of family members, family type, family life cycle, income, employment, religion, race, and home ownership,
Market segmentation based on geographical means is the basis for grouping consumers using geographical aspects such as places, locations and regions. Thus the segmentation can be developed into several parts, such as regions, areas of population density, and climate.
Market segmentation which is carried out on a psychographic basis is a grouping of markets based on personality traits. Market segmentation based on this psychographic, found to include several things, such as: social class, lifestyle, and personality.