Market Segmentation: Meaning, Objectives, Features, Types (Explained)

The concept of market segmentation is based on the assumption that markets are not homogeneous but are heterogeneous. Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-markets or segments, each of which tends to be homogeneous in all significant aspects.

Meaning of Market Segmentation

For instance, two customers of a product are never common but they differ their nature, qualities, habits, hobbies, income and purchasing techniques. They also differ in their behaviour and buying decisions.

Now on the basis of these characteristics, customers having similar qualities and characteristics are grouped in segments. The characteristics of customers of one segment differ with those of other segments. In this way, market segmentation refers to the various segments of the market based on common characteristics of the customers.

In a sense, market segmentation is the strategy of divide and conquer, like, dividing markets into segments in order to conquer them.

In short, market segmentation is the division and subdivision of a market on the basis of common characteristics, such as nature, taste, qualities, perception, habits, income, age, sex, behaviour, etc. of the customers.

This grouping of customers or segmenting of the market is called market segmentation. Market segmentation is a customer-oriented philosophy.

Objectives of Market Segmentation

It is an admitted fact that all the customers are not common but differ widely as to nature, habits, income, behaviour, age and buying decisions etc. This difference affects the selection of commodities. Market Segmentation: Meaning Objectives Features Types

Thus, The main object of market segmentation is to locate the difference among the customers so that the seller may determine its marketing strategies.

For different groups of customers, like, market segments, we have different sets of marketing strategies.

The purpose of market segmentation is to determine the difference among purchases which may affect the choice of market area or marketing methods.

On the basis of the above discussion, the objectives of market segmentation may be summarised as under:

Grouping of customers on the basis of their homogeneous characteristics, such as nature, habits, income, behaviour qualities and needs etc.
To located or identify the tastes, buying motives, needs, priorities and preferences of the customers.
To determine marketing strategies, targets, and goals.
To make the activities of the firm customer oriented. Customer orientation Makes marketing segment an important pillar of the Marketing concept.
To identify the areas or sectors where the customers may be created and the sphere of the market is expanded.

Types of Market Segmentation

The different types of segments are mainly concerned with two aspects:

Dividing the customers into meaningful homogeneous groups.
Revising the appropriate marketing mix to maximize the profitability of the operations.

The different types of segments are briefly as follows:

1. Territorial or Graphic Segmentation

We can divide a country into two distinct reasons rural Markets and urban market.

Similarly, the country market can be divided State wise and each state may represent a segment.

This type of market segmentation is very commonly used in allocating the territories to the salesman.

2. Demographic Segmentation

Customers are classified inhomogeneous under demographic similarities like age, sex, educational level, income.

It is thought that persons in the same age group can be approached by the same type of appeal and publicity medium.

Income level grouping may be useful as regards the ability of the persons to purchase the offered product.

In the same way, grouping on the sex basis plays an important part in such segmentation.

3. Socio Physiological Segmentation

Different social classes have different spending behaviour patterns.

Social classes aggressiveness, submissiveness, degrees of cautiousness and venturesomeness with Value differences determine this type of market segmentation.

4. Need-Oriented Segmentation

Here the segmentation is done on the basis of needs or benefits a group seeks from the goods.

5. Volume Segmentation

This involves segmenting of marketing judging the event of use such as heavy, medium, light uses and those who do not use the product at all.

Volume segmentation may further be segmented on a demographic basis.

6. Qualitative Segmentation

In this type of market segmentation, Emphasis is placed on repeat purchasing by the buyers.

This is first the extension of the volume segmentation. However, socio-economic characteristics cannot be correlated with heavy or light consumption. Know: Efficient-market hypothesis.

7. Product Segmentation

This is directed towards differences among the product that comprise markets.

Product segmentation is a less rational approach than market segmentation unless there are great differences among the products involved, differentiated marketing helps the organisation to market products to satisfy market demands and it is more proper to satisfy its customers’ needs. 10 Main Factors Affecting Marketing Environment (Explained).

8. Lifestyle Segmentation

This emphasises segmentation on the basis of the distinctive mode of living of segments involving questions regarding how they spend their time, the nature of their interests and the basic characteristics like stages in the life cycle, income, education.

Today’s marketing manager is required to understand the social and physiological determinants of customer behaviour if he desires his marketing strategy to be effective for this purpose, he must understand the customer’s psychology and take the help of motivation research where relevant.

Characteristics of Market Segmentation

Some of the important features or characteristics of market segmentation are as follows:

Market segmentation is a process through which the market is divided into different segments. ‘A market segment consists’ of a group of customers who share a similar set of wants.
The marketer does not create the segments, but identify the segments and decide which one to target.
Market segmentation is the result of ‘Modern Marketing Concept, and micromarketing which emphasis on the fact that all buyers are different, and the marketers must recognise the importance of heterogeneous demand.
Varied and complex buyer behaviour is the root cause of market segmentation.
Segmentation gives special emphasis on the demand side of the market. It is a more rational and more precise adjustment of the product and marketing effort is tuned with consumer needs and requirements.
It is a method for achieving a maximum market response from Limited market resources by recognising differences in the response characteristics of various parts of the market.
Market segmentation has become the need of time in a modern large business in which it is being used as a strategy of “divide and conquer” like, dividing markets in order to conquer them. It is an answer to the question, To whom should we sell our products and what should we sell them.
It enables the marketers to give better alternatives to the selection of customers and offer an appropriate marketing mix for each chosen segment or a group of buyers having homogenous demand.
The purpose of segmentation is to determine the difference among buyers which may be consequential in choosing among them or marketing to them.
Market segmentation provides a basis for improved performance through the correct application of selected Marketing concepts and techniques.
The basic idea of segmentation is to find groups of people who react differently to marketing efforts and then to the market mix to optimally appeal to the needs of each segment chosen as a target market.

Favourable Conditions for Effective Market Segmentation

The use of the concept of market segmentation will be more useful in the following conditions

The number of potential customers of the target market must be measurable.
The Various required information and data about the target market must be accessible.
The target segment should be large enough. There must be consumers in sufficient number to provide profitable sales volume to this company.
The prospective target segment must be accessible itself through the existing channels of distribution of the company, the advertising media and Salesforce to minimise cost and unnecessary wastage of efforts.

Bonus: 8 Main Applications of Marketing Research (Explained).

Conclusion

Market segmentation refers to dividing the heterogeneous market into smaller customer divisions having certain homogeneous characteristics that can be satisfied by the firm.

Market segmentation is a method for achieving a maximum market response from Limited marketing resources by recognising differences in the response characteristics of various parts of the market.

Segmentation gives special emphasis on the demand side of the market. It is a more rational and more precious adjustment of the product and marketing effort in tuned with consumer needs and requirements.

Thus, now you know the Market Segmentation: Meaning Objectives Features Types.