Market Segmentation

There are many ways in which a market can be segmented. A marketer will need to decide which strategy is best for a given product or service. Sometimes the best option arises from using different strategies in conjunction. Approaches to segmentation result from answers to the following questions: where, who, why and how? Jon Weaver, Marketing Manager at Bournemouth Borough Council applies a multi-strategy approach to identify segments.

Geographic segmentation: Where?

A market can be divided according to where consumers are located. On a trip abroad you might have noticed that people enjoy more outdoor activities than back home. You could also be surprised by the amount of people that like drinking hot coffee at the beach in Kompong Som. If you visit this website you will see differences in food preferences around the world.

Understanding cultural differences between countries could be pivotal for business success, consequently marketers will need to tailor their strategies according to where consumers are.

Geographic segmentation is the division of the market according to different geographical units like continents, countries, regions, counties or neighbourhoods. This form of segmentation provides the marketer with a quick snapshot of consumers within a delimited area.

Geographic segmentation can be a useful strategy to segment markets because it:

provides a quick overview of differences and similarities between consumers according to geographical unit;
can identify cultural differences between geographical units;
takes into consideration climatic differences between geographical units;
recognises language differences between geographical units.
But this strategy fails to take into consideration other important variables such as personality, age and consumer lifestyles. Failing to recognise this could hinder a company’s potential for success.

For example some youth groups across the world appear to be somewhat similar. Youth groups will tend to listen to similar music and follow similar fashion trends. If you were to do a quick check of people’s nationalities in a 18s-30s club in Phnom Penh, you would find a very international clientele. You might have found that you can befriend foreign people of your same age easily because you share common interests.

Demographic segmentation: Who?

A very popular form of dividing the market is through demographic variables. Understanding who consumers are will enable you to more closely identify and understand their needs, product and services usage rates and wants.

Understanding who consumers are requires companies to divide consumers into groups based on variables such as gender, age, income, social class, religion, race or family lifecycle [insert diagram g].

A clear advantage of this strategy over others is that there are vast amounts of secondary data available that will enable you to divide a market according to demographic variables

Psycho-demographic segmentation: Why?

Unlike demographic segmentation strategies that describe who is purchasing a product or service, psycho-demographic segmentation attempts to answer the ‘why’s’ regarding consumer’s purchasing behaviour. Through this segmentation strategy markets are divided into groups based on personality, lifestyle and values variables.

Segmenting consumers into lifestyles is based on the notion that a person’s lifestyle has a direct impact on their interests in products and services.

Since personality traits have been correlated to (matched with) product categories consumers favour as well as persuasive appeals they respond to, marketers can use personality variables to segment their markets. Generally, this type of segmentation is successful for image-based products, such as cosmetics, clothing, jewellery, cigarettes, alcohol, mobile phones, etc.

What Is the Meaning of Mass Market?

The term mass market refers to a large, undifferentiated market of consumers with widely varied backgrounds. Products and services needed by almost every member of society are suited for the mass market. Such items as electric and gas utilities, soap, paper towels and gasoline, for example, can be advertised and sold to almost anyone, making them mass market goods.

History of Mass Marketing

Throughout the history of the world, businesses have traditionally served very small geographic markets. The size of a business’s target markets were generally limited to the range of the entrepreneur’s personal mode of travel.
In the late 1800s and early 1900s, advances in transportation such as railways and automobiles opened up the door for mass merchandiser distribution. In the 1920s, radio broadcasts made it possible for companies to send advertising messages to large, undifferentiated audiences at once, giving birth to the mass market concept and the first mass marketing techniques.

Types of Mass Marketing

Businesses can reach the mass market with advertising messages through a variety of media. Radio, as mentioned above, is the oldest mass market medium. Television quickly took a dominant role as the mass medium of choice of a large number of businesses. Television remained the most effective means of reaching mass market audiences until innovations in technology and the Internet began to change the game around the turn of the 21st century.
Newspapers are also a traditional mass market medium, although not as effective as radio or television due to the regional or biased nature of individual publications. The coming of the digital age revolutionized marketing strategy.

Advantages of Mass Marketing

The main advantages of advertising to and serving the mass market are the scope and cost-efficiency of doing business on such a large scale. Advertising messages broadcast over mass media can reach millions of viewers in a single showing, and economies of scale make mass distribution cheaper than regional deliveries.

Disadvantages of Mass Marketing

Despite their advantages, mass markets feature a significant weakness. Advertising or distributing niche products for unique market segments in the mass market can be extremely expensive compared to the impact achieved.
Running an advertisement for investment banking services on a major television network, for example, could be an enormous waste of money, since the vast majority of network viewers are not business owners looking to incorporate their companies. Mass marketing also fails to deliver the personalized experience that customers have come to expect, Marketing Insider Group notes.

Big Data and Market Segmentation

Increasingly precise market segmentation is the antidote to yesterday’s mass marketing’s inherent weakness. According to Leadspace, big data has played a pivitol role in solving the problem of overly broad, unsegmented marketing outreach. Data analytics allows companies to pinpoint their target audience and craft personalized messages tailored to their customers.
Traditional media such as magazines, websites and billboards still have their place. Marketers can use data to target specific demographics and geographic regions at a lower cost than mass market media. Markets can be segmented according to a number of factors, including psychology, buying behavior, demographics, income, region and other niche market examples.

QBiz Solution Co., Ltd.

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