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Market Segmentation

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Market segmentation is a marketing process through which a company divides a broad market into smaller groups for members with similarities or certain characteristics in common.

Once the target audience is divided, it'll be easier to develop a more effective marketing strategy for each group in question. In this way, the effort and work are focused on reducing the cost, compared to a campaign focused on a larger and more heterogeneous audience. In addition, the result is usually faster and more satisfactory.

Objective of market segmentation

The market segmentation strategy seeks that companies know well the characteristics of people when consuming a product or service. So this allows them to offer what they really need. They try, therefore, to get companies to focus on a few target markets instead of trying to target everyone. Thus obtaining a competitive advantage in a certain segment.

It's a strategy often used for small businesses, since they don't usually have the necessary resources to attract the entire public. Although not necessarily, since sometimes the competition is so great that large companies also specialize in a market segment. Companies that use this method often focus on customer needs and how products or services could improve their daily lives. In addition, some companies may allow consumers to participate in your product or service.

Types of market segmentation

The way in which companies or other organizations carry out the grouping into segments can depend on variables as different as tastes, fashions, styles, personality types, their geographical location or the level of wealth.

Taking into account this high number of criteria, companies seek to know people's behaviors when consuming a product or service. This being so, the next step will be to classify individuals into segments of the public that have the closest possible response to the product offered. A classification of the main types of market segmentation could be the following:

- Demographic characteristics: Which could focus on details such as age, social class, gender, culture or religion.
- Geographic area: Answer questions about what region it's from, in what areas it acquires the products, what is its country of residence or the relief of the place where it lives.
- Consumer behavior: It falls on the idea of ​​the end of the consumer, that is, knowing why you buy and what you're looking for when you want something. For example, you can look for efficiency, value for money or the image you project to others.
- Psychological features: Refers to tastes, fashions, styles, character.
- Economic factors: Job position, job stability or income level.

Therefore, knowing with great precision the details and behaviors of each segment will be a basic element when developing an effective marketing mix to sell efficiently. That is, it'll be vital to be clear that the product in question is created and directed to a certain part of the consumer population.

Employing segmentation helps to reliably measure the effort and optimization of resources dedicated to a project.

Market Segmentation Example

It may seem obvious, for example, that if I have a brand of guitar accessories, it would not be very smart to put commercials on all televisions and in prime time. What could we do? Locate individuals who are potentially going to use my product. For example, of course, people interested in music. It will be much more effective to place ads in music magazines, musical instrument stores and related sites.

Just as the previous example may seem excessively basic and logical, it shouldn't be forgotten that segmentation is a basic marketing process for companies. In other words, it'll also be necessary to take into account essential factors such as profitability. Since the segment must be large enough to make a profit or be located in locations that the company is able to supply.

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