Understanding Market Segmentation and its Types – Market Segmentation is the process of defining and grouping large homogeneous markets into segments that can be clearly identified based on needs, desires or similar demand characteristics.
The purpose of Market Segmentation is to design the right marketing mix in accordance with customer expectations in the targeted segment.
In other words, Market Segmentation is the process of dividing the market of potential customers into different groups and segments based on certain characteristics. Members of this group have the same characteristics and usually have one or more of the same aspects between them.
Today, market segmentation is one of the most efficient tools for marketers to meet the needs of the target consumer groups. With this Market Segmentation. Marketers will find it easier to personalize their marketing campaigns, focus on what is needed and to group similar consumers to target specific audiences in a cost-effective manner.
The concept of market segmentation was put forward by Wendell R. Smith in 1956 in his article entitled “Product Differentiation and Market Segmentation as Alternative Marketing Strategies” which looked at “many examples of segmentation”. Although simple, Market Segmentation is very important to form any marketing plan.
Understanding Market Segmentation according to Experts
To be clearer about this definition and understanding of Market Segmentation, here are some definitions of Market Segmentation according to some experts.
- Understanding Market Segmentation according to Saladin (2012: 83), Market Segmentation is the process of grouping markets into groups of potential buyers with the same needs or characteristics that they like and shows the same relationship.
- Understanding Market Segmentation according to Schiffman and Kanuk (2006: 37), Market Segmentation is the process of dividing the market into distinctive consumer groups that have the same needs or traits and then selecting one or more segments that will be targeted by different marketing mixes.
- Understanding Market Segmentation according to Tjiptono and Chandra (2012: 150), Market Segmentation is the process of grouping heterogeneous markets into groups or segments that have similarities in terms of needs, desires, behaviors and/or responses to specific marketing programs.
Types of Market Segmentation
Market Segmentation can generally be classified into 4 main types namely Geographical Segmentation, Demographic Segmentation, Behavior Segmentation, and Psychographic Segmentation.
1. Geographic Segmentation
Geographical segmentation divides markets based on geographical location such as continents, countries, provinces, cities, and villages. This type of market segmentation is important for marketers because people from different regions may have different needs.
For example, the demand for bottled water will be higher in areas where clean water is lacking, but in areas where there is sufficient clean water supply, the demand for bottled drinking water will decrease. People from different regions may have different reasons for using the same product. Geographical segmentation helps marketers structure personalize marketing campaigns for everyone.
2. Demographic Segmentation
Demographic Segmentation divides the market based on demographic variables such as age, gender, marital status, family size, income, religion, race, occupation, education, nationality, and so on. This type of segmentation is one of the most common segmentation practices among marketers.
Demographic segmentation is seen in almost every industry such as the automotive (car / motorcycle) industry, beauty products, cellphones, clothing, and others. For example, women will prefer products that are pink (pink) while men tend to avoid this color and will choose other colored products such as black or blue.
3. Behavioral Segmentation
The market can also be divided based on behavior Segmentation. This behavior segmentation can be defined as the process of dividing the total market into smaller homogeneous groups based on customer buying behavior. Behavior segmentation is carried out by marketers based on customer buying patterns such as frequency of use, brand loyalty, benefits needed, and so on.
So this segment focus only on the needs and desires of customers based on the behavior they display. For example, someone might already be accustomed to using a particular brand of cellphone.
4. Psychographic Segmentation
Psychographic segmentation is a market segmentation strategy where the market is divided based on psychology, people’s personality, characteristics, lifestyle, and attitudes.
This psychographic segmentation helps identify people based on the way they think and the kind of life they want. This segmentation method focuses on customer psychology, which companies can focus on for their marketing activities. Personality is a combination of characteristics that make up an individual’s distinctive character and that includes habits, traits, attitudes, temperament, and others while Lifestyle is how a person lives his life.
Personality and lifestyle affect a person’s purchasing decisions and habits. Someone who has a luxurious lifestyle might consider having air conditioning in each room as a necessity, while people who live in the same city but have a conservative lifestyle can think of it as a luxury.