What is the subdividing of market into homogeneous subsets of customers?

refers to the process of defining and subdivision of a large homogeneous market into clearly identifiable segments that possess similar needs or characteristics. Their goal is to design a kind of marketing mix that exactly suits the expectations of customers in the target segment.

How to do a segmentation in marketing

This marketing strategy consists of dividing a broad target market into subsets of consumers, companies or countries that have, or are perceived as common, needs, interests and priorities, and then design and implement strategies to target them. Market segmentation strategies are generally used to further identify and define target customers, and provide supporting information for elements of the marketing plan, such as positioning, to achieve certain goals. Companies can develop product differentiation strategies, or a differentiated approach, referring to specific products or product lines based on demand and attributes specific to the target segment.

Few companies are large enough to cover the needs of an entire market, most must section the total demand into segments and choose those in which the company is best equipped to handle them. For example, a sports shoe company might have market segments for basketball players and long-distance runners. As distinct groups, basketball players and long-distance runners will respond to very different advertisements.

Basic segmentation strategies

The four basic market segmentation strategies are based on:

• Behaviour.
• Demography.
• Psychography.
• Geography.

Factors affecting segmentation

In addition, there are four basic factors that affect market segmentation:

• Clear identification of the segment.
• Measure of the effectiveness of its size.
• Its accessibility through promotions.
• Your adjustment to the company’s policies and resources.

Segmentation in Web Analytics

In tools such as Google Analytics, segmentation is done through segments, which allow you to isolate and analyze subsets of data in order to examine and respond to the trends of the components of a page.

Market segmentation is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behavior.

So, The world has billions of buyers with their sets of needs and behavior.

Also, Segmentation aims to match a group of purchasers with the same set of needs and buyers’ behavior.

Such a group is known as a segment.

So, The process of defining and subdividing a large homogenous market into a clearly identifiable segment having similar needs want, or demand characteristics is called segmentation.

Hence, Its objective is to design a marketing mix that precisely matches the expectation of customers in the targeted segment.

What’s in it for me-

Market Segment Definition 

We have two definitions of a Market Segment that is given below :

“Market segmentation is the subdividing of customers into a homogeneous subset of customers where any subset may conceivably select as a market target to be reached with a distinct marketing mix.” – Philip Kotler

“Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several submarkets of segment each of which tends to be homogeneous is full of significant aspects.”  – William Stanton

So, Market segmentation divides a market into well-defined slices.

A market segment consists of a group of customers who share a similar set of needs and wants.

Also, The market task is to identify which set of segments should be the target.

So, We use two broad broad groups of variables to segment the consumer market.

Also, Some researchers define segments by focusing on descriptive characteristics like geographic, demographic, and psychographic.

While other researchers look segment but behavior characteristics like consumer response to benefits, usage occasion, or brands.

For Instance, It does not matter which type of segment you are using important thing is adjusting the market program to recognize customer differences.

Types of Marketing Segmentation

1. Demographic Segmentation 
2. Geographic Segmentation 
3. Psychographic Segmentation 
4. Behavioral Segmentation 

1. Demographic Segmentation

So, It is associated with market needs, wants. Another important thing is that it is easy to measure.

Age and Life Cycle Stage 

Consumers need change with age. So, the Toothpaste brand launches different products for different age groups like it has products for children, adults, and old people.

Hence, Market of pampers divide into prenatal (0-5) months.baby (6-12) ,toddler (13-23) month,and preschooler (24 month +)

So, We can see an example of a honda which run adds shows sexy college student do party near the car at the beach.

Life Stage 

Many life stages that are not pre-define life such as getting through a divorce, going to involve in the second marriage want to care for their old parents, take a new home.

So, On the data shows that  average US couple spend almost 27000 $

Also, On of the data shows that newlyweds couples in the US spend 70 billion $ in the house in the first six months.

Gender 

So, Women are more communal minded, girls are love to do talk and are curious about their environment. Men first read about the product while women bring it by relating it to a personal level.

So, Major areas of gender differentiation are clothing, hairstyle, cosmetics, Avon.

Generation 

Hence, Each generation is influenced by their time. also, It may be movie, politics, song, and any unique incident of that time.

2. Geographic Segmentation 

It divides the segmentation into geographic units like nations, countries, cities, or neighborhoods.

So, The company operates in a few units.in this way, it can operate its marketing program.

Grass root success was responsible for Nike initial success.

Retail Firms such as Starbucks, Costco, trader, Joc’s get their success by targeting the local market.

Geographic Segmentation Examples

• ZIP code
• City
• Country
• Radius around a certain location
• Climate
• Urban or rural

We can understand it by taking an example if any company of luxury car wants to sell the car and the company decided to establish its plant in the local area where the condition of the road is not good .and people don’t spend their money on a luxury item then it would be a bad decision.

Choosing a geographic location for the business is a very serious decision that is taken by a proper concern from the expert.

3. Psychographic Segmentation 

Hence, Psychographic is the science of using psychology and demographics to better understand consumers.

So, People who are the in same demographic group and have different psychographic profiles. 

Also, Psychographic segmentation buyers are divide into groups based on psychological /personality traits, lifestyle, or values.

So, Consumers are inspired by one of three primary motivations: ideal achievement, and self-expression.

Example of Psychographic Segmentation 

• Personality traits
• Social Class 
• Personality 
• Belief 
• Values
• Attitudes
• Interests
• Lifestyles
• Psychological influences
• Subconscious and conscious beliefs
• Motivations
• Priorities

4. Behavior Segmentation 

So, Behavior segmentation divides consumers into a group according to their observed behavior. Also, Many believe that behavior variables are superior to demographic and geographic for building market segment and some analysts have suggested that behavior segmentation is killing off demographic. Typical behavior variables and their descriptors include :

Purchase /Usage occasion: Regular occasion, Special occasion, Festive occasion, Gift giving

Benefit Sought: Economy, Quality, Service, Level, Convenience, Access,

User status: First Time User, Regular User, Non User

Usage rate/Purchase frequency: Light user, Moderate user, Heavy user

Loyalty status: Loyalty switcher , Non-loyal , Lapsed

Buyer readiness: Unaware, Aware, Intention, To Buy

Benefits and Limitations of Market Segmentation 

Benefits 

1. The organization gets to know its customer better 
2. Provides guidelines for resources for resource allocation.
3. It helps to focus on the strategy of the organization 

Limitation 

1. Target multiple segments increase marketing costs if a company has one market segment then it has low cost but as the segment increases budget also increases.
2. Segmentation can lead to proliferation(large no.) of products. So the problem that creates is that it becomes hard to manage that.
3. Narrowly segmenting a market can hamper the development of broad brand equity .when we manage small areas broader hamper badly.
4. Also, Sometimes don’t achieve the desired goal.

Four Factors That Effect Market Segmentation 

1. Clear identification of the segment. It gets unclear which would our market segment. Selecting our segment is a tough job
2. Measurability of its effective size
3. So, Its accessibility through promotional efforts and 
4. Also, Its appropriateness to the policies and resources of the company.

Conclusion 

Marketing  Segmentation is the way of segment customers on the basis of demographic, psychographic, geography, behavior. While doing it marketers find it difficult to segment customers, because it is possible that we select the customer from a demographic of the same need and wants but have a different psychology.

FAQs

1. How market segmentation increase sales?

It helps many ways to increase sales it target customer on the basis of their past habit as well as bring the repeated customer.

2. Why market segmentation is important in business?

It helps the business to segment customers. So, By this, business can choose which segment of market it want to serve.

3. Can market segmentation be applied in insurance business?

Yes of course. Also, Market segmentation helps insurance business to segment the customer of the same need and wants

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What is homogeneous in market segmentation?

A homogeneous market is a type of marketplace in which each of the products traded in that market are more or less the same, although there may be some minor differences in design.

When the market is divided into homogeneous groups it is called as?

This division of the whole market into relatively homogenous groups is called market segmentation. A market segment consists of people or organizations sharing with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function.

What is homogeneous customer?

In each individual group, the potential customers are generally homogeneous - meaning they are generally fairly similar in terms of their common needs. Additionally, the members of each individual grouping are distinct from the other groups - or, they are different in some ways than customers in other groupings.

What is homogeneous preference in marketing?

a. Homogeneous preferences – consumers have. the same preferences; market shows no natural. segment.