The market consists of a wealth of customers with different purchase needs. So in terms of sales and marketing, it is essential to carry out a very precise market segmentation. When we use this term we mean the division of the market into smaller homogeneous groups (share characteristics and needs) to offer a differentiated offer adapted to each of them.
Thus, from the standpoint of marketing, you can optimize resources and efforts. But it is not so simple, the crux of the matter lies in really knowing consumers to turn to the right target.
Why is it important the market segmentation?
As we said, the market segmentation is essential to optimize the resources of a company. In fact, it is the first step that every marketer must give time to chart a strategic plan. In addition, other benefits of market segmentation are those that expose below:
- Identifying and meeting the specific needs of each market segment. From the analysis of spending habits of different groups that have divided the market, you can learn your tastes and needs. With this information, you can create a product or service tailored to the requirements of the group.
- Targeting marketing strategies. Thanks to this preliminary analysis, they can draw concrete marketing strategies for each target group.
- Creating new niche markets. Again, the study of the target also facilitates the emergence of new business opportunities.
- Competitive analysis. Market segmentation also helps us understand the product and marketing strategies used by the competition. This data is very important to find out the needs that are not covered and what strategies are most effective.
- Optimization positioning. The company improved its position thanks to all the information that has been gathered from the analysis of the target group. The better positioning means more chances for growth in the company.
Variables to segment the market
When segmenting the market, there are different variables that help to group the various target profiles. These variables can be used individually or combined, depending on the interests of the company. Thus, we can distinguish variables are:
- Geographical variables: the market is divided according to their location on the map. You can create subgroups by country, province, city, neighborhood and even the weather.
- Demographic variables: in this case, you create homogeneous groups according to age, gender, occupation, marital stadium, religion, income or nationality. It is easier to identify variable.
- Psychographic variables: social class, lifestyle or consumer personality traits that are valued in this variable.
- Behavioral variables: this type of segmentation draws on consumer habits of the group and how they use the product. Thus, it can be a function of time, frequency of use or level of fidelity.
Criteria for a good market segmentation
Once identified and divided the market segments, what criteria we know what we need to focus marketing strategies?
- Purchasing power and size: the market must be important enough to be profitable. A clear example: in China, only a small fraction of consumers can afford to buy cars. However, the population is so great that in proportion sold more cars in China than in Europe.
- Good profit potential: the market has to grow and has not saturated with competitors. In India, the middle class is growing considerably, which is a great attraction for companies of consumption.IBM was able to refocus after the computer market was saturated, selling its line to Lenovo.
- Ability to reach market segment: if the market is not available, you must find a way to reach him.In order to overcome geographical barriers, the company Unilever employs women in third world countries to distribute its products to rural consumers who do not have access to stores.
- Capacity and resources to compete: it has to take into account the ability of the company to face competition and if the financial resources are sufficient to cope.