MARKET SEGMENTATION

Define market segmentation

This reflects to dividing the entire market into segments with similar buying behavior and characteristics.

List some reasons for market segmentation

• To maintain a competitive edge.

• To capture the needs and wants of minority buyers.

• To gain a better understanding of the firm's target market.

List some benefits of market segmentation

• Increased sales by reaching all potential customers

• Increased customer satisfaction

• Money saved

• Reduced waste

• Improved efficiency

List some drawbacks of market segmentation

• Researching on all segments can be costly

• The firm may miss out on possible revenue by targeting only one or two segments

• Producing goods for multiple segments may become costly and difficult

Differentiate between mass marketing, niche marketing and target marketing

Mass marketing- Also known as undifferentiated marketing. No segmentation takes place. One product is marketing to the entire market.

Niche marketing- Also known as concentrated marketing, where the firm identifies a small segment and focuses on it.

Target marketing- The firm divides the market into smaller segments and uses different marketing strategies to target each one. The firm can choose one or more segments to target.

List the six criteria for segmentation.

Measurability

Accessibility

Substantial

Durability

Action oriented

Differential Responsiveness

What are the four bases of market segmentation?

1. Demographic segmentation

2. Geographic segmentation

3. Psychographic segmentation

4. Behavioral segmentation