ZIMSEC O Level Business Studies Notes: Marketing: Market segmentation
- this is the process of dividing/dis-aggregating the market into discrete/distinct groups(segments) of customers based on a variety of criteria
- Here the word market refers to the total sum of all of a firm’s customers/consumers
- The words customer and consumer after often used interchangeably in business
- Consumer- is the end user of the product
- Customer-purchase the product from the business either for their own use or on behalf of others
- Customers are often, but not always consumers
- Segmentation can be carried out on either consumers or customers but it is usually carried out on customers
- Several criteria can be used to segment the market:
- Economic Factors:
- Income
- Employment status
- Net worth
- Occupation
- Credit rating
- Demographic Factors:
- Gender
- Marital status
- Language
- Age
- Geography
- Education
- Psychological Factors:
- Loyalty
- Lifestyle
- Expectations and needs
- Mass marketing is the opposite of market segmentation
- mass marketing- is an attempt to appeal to an entire market with one basic marketing strategy utilizing mass distribution and mass media.
- It is also known as undifferentiated marketing.
Purpose and benefits of market segmentation
- Market segmentation allows the business to tailor its marketing mix strategy for each particular segment
- Allows the business to focus and allocate its resources on the most profitable segments
- Allows the business to grow and extend its market share by focusing on neglected segments
- Reduces the business’s promotional cost by devising and focusing on what is effective instead of mass marketing
- Helps the business to develop products that more perfectly suit the needs of each segment
- Allows the business to develop new markets more efficiently and effectively
- Enhances the business’s image
- Can increase sales
- Helps the business to retain customers and market share
- Increases competitiveness
- Allows the business to set the best prices for each segment
- Aids the business’s communication with customers for example by advertising in the segment’s favorite platform
- Ultimately all this results in improved profitability
To access more topics go to the O Level Business Notes
