Market segmentation, concept and approach

If, after asking the question: who are we trying to sell to? Our answer is to everyone, the most likely thing is that in the long term we end up not selling to anyone. Considering the market as a unit and trying to satisfy all its members with the same product offer is ineffective. The market is too wide and is made up of different customers with different purchasing needs. The market segmentation divides the market into groups with similar characteristics and needs to offer a differentiated offer tailored to each of the target groups. This allows us to optimize resources and effectively use our marketing efforts.

There are different variables to segment the market, depending on each company a different combination will be used. Market segmentation variables are grouped into geographic, demographic, psychographic, and behavioral variables.

Market segmentation variables :

-Geographic: countries, regions, cities or postal codes.

-Demographic: gender, age, income, education, profession, social class, religion or nationality.

-Psychographic: lifestyle and personality.

-Behavioral: frequency of use of the product, search for profit, level of loyalty, attitude towards the product.

A clear example of a good market segmentation strategy in the fashion sector is Inditex . The Spanish fashion manufacturer and distributor has perfectly managed to segment a mature and complex market into groups with similar characteristics. The Inditex group targets the market through its chain stores: Zara, Pull and Bear, Massimo Dutti, Oysho, Uterqüe, Stradivarius and Berska. Each of them targets a different market segment with a different product offering, depending on the needs of each segment.

Inditex market segmentation :

Zara   is the most general brand of Inditex. It is aimed at young middle-class families (women, men and children) who are looking for the latest trends and quality at a good price.

Pull and Bear is focused on young people looking for current casual urban fashion trends.

Massimo Dutti is aimed at both a masculine and feminine audience, sophisticated, independent and cosmopolitan. It offers higher quality fashion and conveys an image of classic elegance.

Bershka is mainly aimed at the female audience although currently you can also find men’s fashion. Its audience is younger (teenagers) and they are looking for more daring and provocative trends than Pull and Bear urban fashion.

Stradivarius is focused on a young female audience with a dynamic, informal and imaginative style.

Oysho transfers Inditex’s know-how to the women’s lingerie and underwear sector, targeting an audience that seeks quality at a good price

Uterqüe is specialized in fashion accessories (bags, footwear, leather goods, handkerchiefs, glasses, umbrellas) accompanied by a careful selection of clothing. Their products are limited edition but at an affordable price. They use the best qualities and take care of every last detail.

Market segmentation approaches:

Within the market segmentation we find different approaches. The degree of segmentation that each company adopts will depend exclusively on the resources it has and the objectives it has established.

Mass marketing is the starting point of segmentation, it is characterized by mass producing, communicating and distributing a single product for all customers. This approach has been the most widely used by companies for decades. Nowadays it is difficult to reach the public en masse, it is also very unprofitable due to the great diversity of media and distribution points.

Segment marketing is almost halfway between mass marketing and personalized marketing. As mentioned earlier, segmentation tries to divide the market into groups with similar characteristics and needs, the objective of segment marketing is to adapt the company’s offer to the needs of these groups.

Niche marketing goes one step further in market segmentation , trying to further narrow down the segmentation approach, looking for smaller markets with needs that are not being properly met. Normally we can find market niches by dividing segments into subsegments, but it is necessary to find the perfect balance between market specialization and profitability, that is, the niches must be large enough to be profitable.

Personalized marketing or also known as “one-to-one marketing” is the last level of segmentation. This approach to market segmentation treats customers individually, now thanks to technology it is also possible to apply it to a mass market and offer products individually. The client is given the opportunity to participate in the design of the product or the offer, thus obtaining high customization. Companies like Nike and Heineken have already embraced personalized marketing with their Nike ID and Your Heineken services , allowing their customers to personalize their products.

Without a doubt, if we want to work correctly on our commercial strategy, market segmentation is one of the main strategic aspects that every company in the 21st century must define.

 

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