Market segmentation (also called micromarketing) involves
identification of key groups or segments within a market that have common
characteristics, and appeal to certain target consumer groups. Identification of market
segments allows a business to develop advertising or marketing strategies for each
segment ...a more efficient application of resources.
An
example of the use of market segmentation would be an auto parts company who, instead of
sending a large catalogue of all parts to all customers, prints small catalogues such as
one for Corvette parts, mailing only to Corvette owners. The advantage of such a
focused approach is obvious.
Product differentiation is a
means of limiting smaller firms from gaining market share as rapidly as expected within
a concentrated market. This is explained in the paper in the first
reference.
When planning Market Segmentation, the business
should consider the four bases for segmentation: demographic, geographic, psychographic
and behavioristic.
The second reference is a clear and
detailed treatise on market segmentation.
The third
reference is an excellent chapter in “Principles of Marketing and Management”. It
covers marketing segmentation and positioning. It is centered on a bus company in the
UK, but is applicable to any business. The chapter refers to and explains the “STP
process” of Marketing Segmentation: Segmentation, Targeting and Positioning. This is
lengthy, detailed and well written discussion of segmentation. It includes charts,
tables and graphs depicting statistical aspects of the subject.
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