Market segmentation is a strategy that involves
dividing a larger market into subsets of consumers who have common needs and
applications for the goods and
services offered in the market. These subgroups of
consumers can be identified by a number of different demographics, depending on the purposes behind identifying the groups.
Marketing campaigns are often designed and implemented based on this type of customer
segmentation.
One of the main reasons for engaging in
market segmentation is to help the company understand the needs of the customer base. Often the task of
segregating consumers by specific criteria will help the company identify other
applications for their products that may or may not have been self evident
before. Uncovering these other ideas for use of goods and services may help the
company target a larger audience in that same demographic classification and
thus increase market
share
among a specific sub market base.
Market segmentation strategies can be
developed over a wide range of characteristics found among consumers. One group
within the market may be identified by gender, while another group may be
composed of consumers within a given age group. Location is another common component
in market segmentation, as is income level and education level. Generally,
there will be at least a few established customers who fall into more than one
category, but marketing strategists normally allow for this phenomenon.
Along with playing a role in the development of new
marketing approaches to attract a certain demographic within the market base,
market segmentation can also help a company understand ways to enhance customer
loyalty with existing customers. As part of the
process of identifying specific groups within the larger client base, the
company will often ask questions that lead to practical suggestions on how to
make the products more desirable to customers. This activity may lead to
changes in packaging or other similar changes that do not impact the core
product. However, making a few simple changes in the appearance of the product
sends a clear message to consumers that the company does listen to customers.
This demonstration of good will can go a long way to strengthen the ties
between consumer and vendor.