Segmentation allows for greater profits. Marketing and the tailoring of products and services costs money, the less of this that needs to be done the more profits can be made. An example of this is clothes sizes, by making standardized sizes producers can mass produce articles of clothing. If standardized sizing did not exist the manufacturers would have to produce a unique article to the individual consumers exact measurements. The cost of this would make clothes prohibitively expensive.
“Market segmentation is the process of so designing or featuring a product or service that it will make a particularly strong appeal to some identifiable subpart of a total market” (Engel et al, 1995, p.39)
Consumers and their behavior can be split up into various segments such as demographic, geographic, psychographic and behavioral.
Demographics include such factors as age, gender, social class and ethnicity. Geographic factors include region and country. Psychographic areas are comprised of personality and lifestyle. Lastly, behavioral differences include brand loyalty, usage situations and benefits desired.
Different races and ethnicities have demands for goods and services that may not exist in other ethnic segments. An example of this could be South Africans wanting dried meats such as Biltong. If this consumer segment creates enough demand then a supplier will respond to fill the market gap and create marketing strategies for it.
Geography does not simply consist of different land masses and borders. Geographic differences can also dictate diversity in cultures, beliefs and languages; one such example of this is England and France.
All of these consumer behaviors and differences influence marketing decisions and strategies in different ways. The level of influence of each consumer behavior can be dependant on the target consumer of the marketing campaign. The ways in which consumers deliver this influence is through their buying power, consumer purchasing decisions. Marketers themselves aim to glean this information through many methods such as market research surveys and purchasing information databases.
In order to effectively market its products it is vital for a business to understand its target market, the consumer segment. The business’s target consumer will therefore influence the decisions of the businesses marketing strategy.
Different segments will suit different products and as such will offer more opportunities than others. There are ways in which business can determine the most appropriate and profitable market segments. To gauge suitability the following processes are used, measurability, accessibility, substantiality and congruity.
Measurability relates to the information about the size, nature and behavior of a specific segment. Accessibility is the study of how accessible certain segments are. Substantiality gives an idea as to the marketable size of the segments, obviously the larger the market the better, as larger markets will cost less to tailor campaigns and products. Congruity states how homogenized the segment is, how well the consumers fit into the segments defined values.
Basic principals of supply and demand are at work here. The business is supplying the demand from consumers and, in order to increase or keep market share, as well as increase demand for the products, the business must effectively market the products and services by listening to the consumer demands and thus the consumer influences the business.
This philosophy is known as the marketing concept.(Assael, 1998, p.8)
“The marketing concept states that marketers must first define the benefits consumers seek in the marketplace and gear marketing strategies accordingly.” (Assael, 1998, p.8).
It is clear that each consumer segment has a large bearing on marketing decisions. The individual consumers behavior has little power but grouped together with others of similar values and interests it creates a larger ‘consumer’ with enough purchasing power to cause businesses to respond either with new or tailored marketing plans and products.
References:
Solomon, M., Bamossy, G., Askegaard, S. (1999) Consumer Behavior : A European Perspective. 4th Edition. Prentice Hall Europe, Spain.
Engel, J., Blackwell, R., Miniard, P. (1995) Consumer Behavior. 8th Edition. The Dryden Press, Orlando.
Assael, H. (1998) Consumer Behavior And Marketing Action 6th Edition. South-Western College Publishing, Ohio.
