1. DETERMINE WHICH MARKET TO BE SEGMENTIZED
2. IDENTIFY MARKETS SEGMENTS
The process of defining and subdividing a large homogenous
market into clearly identifiable segments having similar needs, wants, or
demand characterstic. Its objective is to design a marketing mix that precisely
matches the expectations of customers in the targeted segment.few companis 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
- Clear identification of the segment
- Measurability of its affective size
- Its accessibility through promotional efforts and
- Its appropriateness to the policies and resources of the company
The four basic market segmentation strategies are based on
- Behavioral
- Demographic
- Psychographic
- Geographical differences
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3. FORMING MARKET SEGMENTATION
Market segmentation is practised by most businesses in one form or another, as a way of streamlining their marketing strategy by dividing broad-based target markets into specific groups of consumers, and devising marketing methods that will appeal to each group.
Identifying viable segments
Clearly defined market segmentation criteria not only ensure that customers are more likely to identify – and purchase – the product that is right for them; it also minimise wastage of resources, reducing the time spent marketing the wrong products to the wrong customers. It is important, however, to focus resources on market segments whose size, growth and profitability is good, both immediately and in the long run. The following 5 market segmentation criteria should be useful when planning your own company’s market segmentation strategy.
METHOD OF
SEGMENTS IDENTIFICATION is start with identifiers customer groups for example
characteristic of people and organizations which is income, family size and
industrial factor. Second is start with customer response profile based on
frequency of purchase.
4. BEST SEGMENTATION STRATEGY
Customized Offerings
The capabilities of organizations to offer customized products is feasible because of extensive
information fl ow and comprehensive data bases, computerized manufacturing systems,
and integrated value chains. This technology combined with the Internet has led to the emergence of “sliver” companies
or “micromultinationals” small, flexible organizations selling highly specialized
products across the world.
Microsegmentation -This form of segmentation seeks to identify narrowly defined segments using one or more
of the previously discussed segmentation variables. It differs from more
aggregate segment formation in that microsegmentation results in a large number of very
small segments. Achieving mass customization
objectives is possible through computer-aided design and manufacturing software, flexible
manufacturing techniques, and flexible supply systems.
Variety-Seeking Strategy - This product strategy is intended to offer buyers opportunities to very their choices in
contrast to making unique choices. Mass customization methods also enable
companies to offer an extensive variety at relatively low prices, thus gaining the advantages
of customized and variety offerings.
5. STRATEGIC ANALYSIS OF MARKET SEGMENTS
Each market segment of interest needs to be studied to determine its potential attractiveness as a market target. The major areas of analysis include customers, competitors, positioning strategy, and financial and market attractiveness.
Customer Analysis
When forming segments, it is useful to find out as much as possible about the customers in each segment. Variables such as those used in dividing product-markets into segments are also helpful in describing the people in the same segments. The objective is to find descriptive characteristics that are highly correlated to the variables used to form the segments. Standardized information services are available for some product-markets including foods, health and beauty aids, and pharmaceuticals. Large markets involving many competitors make it profitable for research firms to collect and analyze data that are useful to the firms serving the market. An essential part of customer analysis is determining how well the buyers in the segment are satisfied. Customer satisfaction depends on the perceived performance of a product and supporting services and the standards that customers use to evaluate that performance. The customer’s standards complicate the relationship between organizational product specifications and satisfaction. Standards may involve something other than prepurchase expectations such as the perceived performance of competing products. Importantly, the standards are likely to vary across market segments.
Competitor analysis
The competing firms are described and evaluated to highlight their strengths and weaknesses. Information useful in the competitor analysis includes business scope and objectives, market position, market targets and customer base, positioning strategy, financial, technical, and operating strengths, management experience and capabilities, and special competitive advantages. It is also important to anticipate the future strategies of key competitors. Value chain analysis can be used to examine competitive advantage at the segment level. A complete assessment of the nature and intensity of competition in the segment is important in determining whether to enter (or exit from) the segment and how to compete in the segment.
Positioning Analysis
Segment analysis involves some preliminary choices about positioning strategy. One objective of segment analysis is to obtain guidelines for developing a positioning strategy. Flexibility exists in selecting how to position the firm (or brand) with its customers and against its competition in a segment. Positioning analysis shows how to combine product, distribution, pricing, and promotion strategies to favorably position the brand with buyers in the segment. Information from positioning maps like see is useful in guiding positioning strategy. The positioning strategy should meet the needs and requirements of the targeted buyers at a cost that yields a profitable margin for the organization.
Financial and market attractiveness
The challenge is in identifying an attractive target
market is to find a market thats large enough for the proposed business but yet
is small enough to avoid attracting larger competition. Assesing the
attractiveness of a target market is tougher than an entire industry. Often,
considerably ingenuity must be employed to finding information to assess the
attractiveness of a specific target market.
