Without a segmentation these companies will either be treated as all the same in which case many will be disappointed by an offer that does not suit them or, equally unsatisfactory, an attempt will be made to treat each and every one as a special accounts, swallowing up a huge resource and yielding very little in the way of profit.
Therefore, it is wise to develop two distinctly different segmentation solutions: Nonmutually Exclusive Segments Virtually all segmentation work, historically, has been based upon the assumption of mutually exclusive market segments.
A segmentation according to industry grouping is therefore one of the most obvious and often most useful we can employ in business to business markets.
Certainly it is possible for market researchers to devise questions which ask people what they require from suppliers, though this is not without some difficulties. Unfortunately, cluster analysis regardless of its many types and forms has inherent limitations and seldom yields coherent market segments.
For example, someone might want to segment the market for widgets among to year-olds who live in Vermont and buy brand XYZ. The time dimension can be an interesting basis for segmentation. Education levels often define market segments.
Some brands are targeted only to women, others only to men. If a brand pours all of its budget into one media, it can possibly dominate the segment of the market that listens to that radio station or reads that magazine.
Markets can be also segmented by hobbies, by political affiliation, by religion, by special interest groups, by sports team loyalties, by university attended, and by hundreds of other variables. This is not always true, but it is a good rule of thumb.
For example, corporations may choose to market their brands in certain countries, but not in others. Any one of them might be the basis for a positioning or a strategy that would appeal to everyone.
Always look at the dollar potential of market segments, not just the number of people in the segments. For many business to business companies these key accounts amount to just a couple of handful of customers. And yet, at a personal level, the purchasing manager may think he has to drive down prices to demonstrate that he is doing an excellent job.
Go for the whole hog. For example, if you were designing a market segmentation questionnaire for an airline, you might conduct a series of depth interviews to help design the questionnaire. Chili is marketed more aggressively in the fall, with the onset of cooler weather.
Some stores stay open later than others. If all of your marketing is direct mail, and you can identify the addresses that belong to each segment, then you can attack all segments assuming your product is relevant to all segments.
Third, the segmentation can define opportunities for new products targeted to each psychographic segment. If the goal, however, is to develop the strategic positioning and advertising messages for a new smartphone or a new car, then occasion-based segmentation would not be applicable.
All three of these needs must be addressed but there could be conflicts. At a company level, there could be an overriding need to choose suppliers that offer quality products, suppliers that are committed to the market, and suppliers that can be trusted. The professional buyers look after the day today procurement of supplies.
In other words there is no competitive advantage to be achieved in doing what everyone else is doing.
Time Segmentation Time segmentation is less common, but can be highly effective. If the goal is to develop new product-development templates for a restaurant chain, then occasion-based segmentation might be a good solution. It is based on the fact that different media tend to reach different audiences.
Demographic segmentation almost always plays some role in a segmentation strategy. Go forth and segment.
Correlation analysis and regression can be used for this purpose. In many markets the needs of customers have a good deal of crossover. Some of the most common mistakes:Market Segmenting – Essay Sample Market segmenting is the process of dividing the market into dissimilar, distinctive groups of people who have similar needs to be satisfied, alike wants and behavior, or who might want same products & services.
A Framework for Market Segmentation. Market segmentation studies should ultimately inform marketing decisions. In order for this to happen, segments must be high quality (i.e., cluster members are similar to each other and Recent work detailed in a paper by Friedman and Meulman () addresses this issue with an.
When the term “market segmentation” is used, most of us immediately think of psychographics, lifestyles, values, behaviors, and multivariate cluster analysis routines.
Consumer Behavior Segmentation paper When attempting to segment the market for aftermarket truck accessories in the trucking industry we used a combination of lifestyle based segmentation and psychographic based segmentation techniques that we learned in class.
step 2: apply market segmentation analysis to the smaller customers However, the corollary of the 80/20 rule is that 80% of customers account for only 20% of revenue. Eighty per cent of customers are, by definition, relatively small accounts and they dominate the customer population.
The concept of market segmentation helps a firm to effectively market its products or services without exerting much effort. This paper will analyze the scope of market segmentation for a coffee market in Baton Rouge, Louisiana area.Download