The process of defining and subdividing a large homogenous market into clearly identifiable segmentshaving similar needs, wants, or demand characteristics. Itsobjective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.
Few companies are big enough to supply the needs of an entire market; most must breakdown the total demand into segments and choose those that the company is best equipped to handle. Four basic factors that affect market segmentation are (1) clear identification of the segment, (2) measurability of its effective size, (3) its accessibilitythrough promotional efforts, and (4) its appropriateness to the policies and resources of the company. The four basic market segmentation-strategies are based on (a) behavioral (b) demographic, (c) psychographic, and (d) geographical differences.
- Designing responsive products to meet the needs of the marketplace.
- Developing effective and cost seeicientpromotional tactics, campaigns.
- Gauging Your company's market position--how your company is perceived by its customers and potential customers relative to the competition.
- Fine tuning current marketing strategies.
2. Market Selection — selecting one or more groups to target for marketing activity. You must make strategic choices based on customer needs, competitive opportunities, corporate objectives, and your firm’s financial, technical and marketing resources.
3. Positioning — carving out a market niche for your firm. This may be accomplished by searching out unique marketing advantages, seeking new market segments that competitors are not cultivating, or developing new approaches to old problems.