Market segmentation is a marketing concept which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference. Market segmentation assists the marketers to devise and execute relevant strategies to sponsor their products amongst the target market. These segments can later be used to optimise products and advertising to different customers. Market segmentation is the process of dividing a targeted audience into subgroups based on commonalities, ranging from age, gender or location to priorities, values and behavior. All commercial banks service a wide range of people, many of whom have relatable life situations and monetary goals. Market segmentation is the process of qualifying companies (or people) into groups that respond similarly to marketing strategies. This allows the company to increase its overall efficiency by focusing limited resources on efforts that produce the best return on investment (ROI). A market segment is a group of people in a homogeneous market who share common marketable characteristics. To meet the most basic criteria of a market segment, three characteristics must be present. A market segment is a category of customers who have similar likes and dislikes in an otherwise homogeneous market. Market segmentation becomes necessary when a particular company decides to identify a specific type of consumer for their product or service. Micromarketing: Advertising Focused on a Specific Group of Customers, Create a Strong Brand to Grow Your Business, Demographically by age, gender, family size, income, or life cycle, Psychographically by social class, lifestyle, or personality, Behaviorally by benefit, use, or response. Once a… For example, women with children under 18, college students, etc. What is Market Segmentation? Market Segment: Define who your potential buyers are, also known as the market segment. A market is people or organizations that have the ability to purchase a product or service. Gather demographic, behavior, and psychographic information on your market segment. Taking it a step further, if the same bank wants to effectively market products and services to millennials, Roth IRAs and 401(k)s may not be the best option. How Market Segments and Brand Segments Work Together Market segments influence brand segments through various delineations. Market segmentation is the process of dividing a market of potential customers into groups or segments depending on different characteristics. Cereal producers market actively to three or four market segments at a time, pushing traditional brands that appeal to older consumers and healthy brands to health-conscious consumers, while building brand loyalty among the youngest consumers by tying their products to, say, popular children's movie themes. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Second, there needs to be a distinction that makes the segment unique from other groups. These two segments each define a useful segment in marketing today. Market segmentation is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behavior. This type of market segmentation is important for marketers as people belonging to different regions may have different requirements. Market orientation is a business approach that prioritizes identifying the needs and desires of consumers and creating products that satisfy them. If, for example, a bank wants to market to Baby Boomers, it conducts research and finds that retirement planning is the most important aspect of their financial needs. Below-the-line advertising is an advertising strategy in which a product is promoted in mediums other than radio, television, billboards, print, and film. Brand identity is the visible elements of a brand, such as color, design, and logo, that identify and distinguish the brand in consumers' minds. Any time you suspect there are significant, measurable differences in your market, you should consider market segmentation. A market can be further broken down into segments. more Micromarketing: Advertising Focused on a Specific Group of Customers Products need to be tailored to a specific customer who makes up a target market. Market segments are known to respond somewhat predictably to a marketing strategy, plan, or promotion. Market segmentation is a marketing term that refers to aggregating prospective buyers into groups or segments with common needs and who respond similarly to a marketing action. Micromarketing is an approach to advertising that tends to target a specific group of people in a niche market. A market segment is a group of people who share one or more common characteristics, lumped together for marketing purposes. There are several important reasons why market segmentation needs to be done carefully. A sports-shoe manufacturer might define several market segments that include elite athletes, frequent gym-goers, fashion-conscious women, and middle-aged men who want quality and comfort in their shoes. Market segmentation is a marketing strategy which involves dividing a broad target market into subsets of consumers, businesses, or countries that have, or are perceived to have, common needs, interests, and priorities, and then designing and implementing strategies to target them. Market Segmentation Definition - What is Market Segmentation Segmentation is the process of creating small portions within a broad market to choose the right target market for various brands. As its name suggests, market segmentation is the process of separating a market into sub-groups, in which its members share common characteristics. This is why marketers use segmentation when deciding a target market. Customer needs differ. At the he… Eight Benefits of Market Segmentation Once the enterprise selects on their target market, they can easily codify strat… The criteria for a market segment are that there is homogeneity among the segment's main needs, the segment must be unique, and the segment's members must produce a common reaction to marketing tactics. Market segmentation is an extension of market research that seeks to identify targeted groups of consumers to tailor products and branding in a way that is attractive to the group. Markets can be segmented in several ways such as geographically, demographically, or behaviorally. In all cases, the manufacturer's marketing intelligence about each segment enables it to develop and advertise products with a high appeal more efficiently than trying to appeal to the broader masses. A marketis people or organizations who have the ability to purchase a product or service. It segments customers and audiences into groups that share similar characteristics such as demographics, interests, needs, or location. Brand loyalty is the positive association consumers attach to a particular product, demonstrated by their repeat purchases of it. Market research is when a company uses surveys, product tests, and focus groups to research and assess the viability of a new product or service. A good example of market segments and how a company markets to those groups is in the banking industry. 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