Market Segmentation Strategies and Importance
The concept of market segmentation defines three strategic options of marketing: These are as follows: Undifferentiated marketing strategy, Differentiated marketing strategy and Concentrated Marketing strategy.
Undifferentiated marketing strategy
Under this marketing strategy, the marketing management focuses on the common needs of the people and designs its goods and services to satisfy the maximum number of customers. It is neither grouping of customers nor market segmentation. It relies on mass production, mass advertising and mass distribution. This strategy does not make any difference among the customers of the product of the enterprise. The principle of same brand, same price, same product, same packaging, same media, same marketing programme and same advertising is followed for all the customers and whole market. This strategy is also known as market aggregation strategy. Usually, the product-oriented firms adopt this strategy.
Differentiated marketing strategy
Under this marketing strategy, the grouping of customers is done on the basis of their common needs and desires viz. region, income, age, education, personality, profession, religion, etc. The whole market is divided into various segments. Here, different products are manufactured for different market segments. Such marketing strategy increases sales and profits of the firm, attracts large number of customers from all corners of the society and offers higher customer satisfaction by producing goods and services according to the needs and desires of the consumers. Thus, this type of consumer-oriented strategy is also known as market segmentation or market segregation strategy.
Under this marketing strategy, the marketing manager concentrates on one particular segment instead of various segments (or whole market). It follows one product and one segment principle and creates brand monopoly. According to Philip Kotler, “Instead of going after a small share of a large market, the firm goes after a large of one or a few sub-markets. But another way instead of spreading itself thin in many parts of the market, it concentrates its forces to gain a good market position in a few areas.” This strategy is best suitable in case when new products are introduced in the market. As all marketing efforts are concentrated on one market segment, it provides best possible satisfaction to the consumers.
Importance of Market Segmentation
The Market Segmentation strategy is a consumer-oriented philosophy. It benefits both the marketers and the consumers. The following points explain the importance of market segmentation:
Helpful in Competition
Market segmentation provides an opportunity of making deep study of the products, policies and strategies of competitors in all the segments. With this, the business enterprise can adopt different strategies for different markets taking into account the rival strategies.
Provides opportunities to expand market
By segmenting the market, a marketer is able to create new markets for their products.
To discover marketing opportunity
Market segmentation helps in making intensive marketing research in all the segments. The habits, tastes, hobbies and nature of consumers of all the segments can be understood deeply. Such research helps in discovering marketing opportunities in these segments.
Knowledge of customer needs
By the help of market segmentation, the marketing manager can easily get to know why customer do or do not buy certain products or services. All marketing activities are directed towards the customer satisfaction. With the help of segmentation, it becomes easy to measure the level of segmentation of each segment and also to make improvements in the segmentation level.
Adjustment in products
Under market segmentation, marketing manager can easily make adjustments in their products and market communication according to the change in taste, need, nature and income of the consumers.
Increase in Sales Volume
By segmentation, the marketing manager can increase the sales volume of the enterprise. Each market segment has different demand pattern and when the marketing manager satisfies the demands of different segments by changing the products, the total sales volume of an enterprise increases.
Adopt sound and effective marketing programme
When customer needs are fully understood by the marketing manager Market segmentation divides the whole market into several segments and Individual marketing programmes are prepared for every segment. These programmes are better and more effective than a single programme for the whole market.
Effective advertising appeal
The advertising appeals are designed in a way so as to create a positive image of the individuals who use certain products. The message conveyed through advertising appeals influences the purchasing decisions of different buyers groups which are recognized with the help of market segmentation. Thus, different advertising appeals can be formulated for different segments. Hence, segmentation helps to make the advertising appeals more effective.
Increases marketing efficiency
The market segmentation increases marketing efficiency by offering specific pricing, sales promotion and distribution channels as per the requirements of different segments. The unique market strategies can be framed regarding product, pricing, advertising, sales promotion, distribution channel, etc. according to the changing needs of the segments. This increases the marketing efficiency of the business enterprise.