Explain the process of Market Segmentation?

Below steps are mostly followed to segment the market.
1) Segmenting the market using the Segmentation variables. The marketers should clearly define a segment such that it doesn’t exhibit the characteristics of a different segment. The individuals in the group or segment should more or less have common characteristics. For example, a deodorant for male customers will be very different from that needed by females in the market. This will come under segmenting the market using demographic variables, etc.

2) Develop profile of the segments. It refers to the descriptive characteristics of the members in identified segments. it will include –

• Population of the segment
• Purchasing behaviour
• Likes and dislikes
• Their spending potential
• Lifestyle, etc.

All this information helps in planning and forecasting. For example, products for kids can have sub-groups – toddlers, infants, school going, etc.

3) Evaluating attractiveness of each segment. It is important for the organisation to know the value of each segment.

• Organisations align its objectives with each segment
• Consider its potential – long term attractiveness
• Likelihood of competition
• Present resources can be utilised to what extent
• Costs of venturing into the segment, etc.

4) Selecting the target segment. The organization selects a segment or segments (target market) based on the information from the segments after aligning it with the organisation objectives, capabilities and potential. The organisations can choose to enter a single segment or more. Many times new firms enter a single segment and eventually venture into other segments based on experience and the new segments attractiveness.

5) Identify potential positioning concepts for the target market(s). Positioning is concerned with developing marketing mix suitable for the target market. It refers to how the product will sit in the customers mind of the target market – how a brand is perceived by the consumer. The organisations need to develop and implement appropriate Marketing Mix variables (4P’s) for each target market. For example, consumers perceive Samsung and Sony products differently.Similarly, Jaguar is perceived as a luxury car while Ferrari is perceived as a sports car.

6) Develop and implement the chosen positioning concept, and review behaviour. The organisations have to ensure that the positioning concept is successfully implemented in the target market. All the departments of the Strategic Business Units (SBU’s) and other functions should work in cohesion for its success. The communication should be aligned with the product and its positioning in the target market. For example, a fairness cream targeting young male customers cannot have females in its promotion activities. Review is important as the preferences of customer keep changing with time.