Do you want to know what market segmentation and what are the different levels of market segmentation? You have spotted on the right place to know the answer of these questions.
What is Market Segmentation
Market segmentation refers to dividing the market into further small areas or markets is known as market segmentation. Basically, in market segmentation, marketers see the different needs and demand of consumer and act accordingly.
Read More: Steps in Marketing Research Process
No doubt, market is composed of purchasers and purchasers vary from another in one or more manners. They may vary in their resources, wants, buying attitudes, locations and buying practices.
In order to match the unique needs for effective products or services, most business organizations divided the big, heterogeneous markets into smaller one through market segmentation.
In recent era the business organizations feels that they are not able to satisfy all kinds of buyers with their products or services or they cannot satisfy the all purchasers in the same manner. Purchasers are too widely scattered, too numerous, too differ in their buying practices and needs.
Moreover, the business organization too differs in satisfying various segments of the market with their products or services.
As it is not possible for business organizations to satisfy purchasers of whole market, so every business organization should specify portions of market in order to satisfy those portions or segments more profitably and effectively as compared to its competitors.
Levels of Market Segmentation with Examples
Every purchaser is potentially a separate market because purchasers have particular needs and wants. In ideal case, separate marketing program may be design by seller for every purchaser.
Read More: Stages of Buyer Decision Making Process
There are certain business organizations who try to satisfy purchaser on individual basis while other business organizations deals with larger portion of smaller purchasers and they do not consider full segmentation effective for their business organization.
Broader classes of purchasers having various product needs and purchasing responses are considered by the business organization that does not like complete segmentation.
Thus at various levels, marketing segmentation can be performed. Following are the four levels of market segmentation.
Mass Marketing
Target marketing is not always performed by business organizations. In fact in the 1900s most of the consumer product business organizations moved toward mass marketing, Which means mass generating, mass delivering and mass promoting the similar product in about the similar manner to all consumers.
Taking the example of Coca Cola that generate only one drink for entire market expecting that this single drink will has been sufficient for all customers.
As mass marketing produces the biggest potential market which serves as traditional argument for mass marketing. This mass marketing then result into minimizing costs which further convert into either higher margins or minimize prices.
Read More: Stages of Business Buying Decision Process
However, there are many components that makes mass marketing harder. Also mass marketing becomes difficult by advancement in distribution channels and advertising media.
Segment Marketing
The broader segments of the market are separated by the business organization that performs segment marketing by adjusting its offers that best meet the demands of the segment. There are many benefits associated with the segment marketing as compared to mass marketing.
The business organization can market more effectively by offering its targeted products or services, communication programs and channels to only consumers that can be efficiently and profitably served by the business organization.
The business organization can market more potentially by modifying its prices, products and programs according to the requirements of targeted segments.
If less number of competitors considers particular kind of segment of market then the business organization, targeting same segment, may deal with less competitors.
Niche Marketing
Market segments are generally bigger, specifiable groups inside market, such as performance car purchasers, economy car purchasers, luxury car purchasers and utility car purchasers, etc.
The subgroups inside the segments are covered by the niche marketing. More narrowly specified group that is generated by subdividing the segment into sub-segments is considered as niche or in other words a specified group having particular combination of features that may search special kind of benefits.
Read More: Types of Business Buyer Behavior
Segments are larger in size and they as attractive to many competitors but niches are smaller in size and they are attractive to one or few competitors.
The needs of niches are presumably consider in an effective manner by niche marketer that their consumers feel pleasure to pay high prices against their products.
Micro Marketing
The offerings and marketing programs are tailored by the segment and niche marketers to fulfill the requirements of different marketing segments.
These marketers are not able to satisfy each individual customer with their products or services. Thus mass marketing and micro marketing are two extreme levels of market segmentation and segmented marketing and niche marketing lies in between the two extremes.
The activity of tailoring of particular products and marketing programs in accordance with the tastes of particular individuals and locations is referred as micro marketing. Micro marketing includes individual marketing and local marketing.
