Market Division Criteria
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In the dynamic world of business, understanding the needs of customers and profiling them is crucial for successful marketing strategies. This article, part of a complete series on Segmentation, delves into the various criteria for market segmentation.
Beyond customers’ needs and customer profiling, market segmentation criteria include several key dimensions.
Demographics
Demographic segmentation profiles customers based on factors such as age, gender, income, education, occupation, and marital status. These attributes help in grouping customers with similar life-stage or socio-economic traits that influence buying behavior.
Psychographics
Psychographic segmentation targets customers based on their values, attitudes, and lifestyles. This approach provides insight into the psychological factors shaping consumer preferences and decisions.
Behavioral
Patterns such as brand loyalty, usage frequency, benefits sought, and product usage occasions segment customers based on how they interact with products or services.
Geographics
Segmenting by location includes culture, language, climate, population density, or regional attributes that affect customers' needs and buying habits.
B2B-specific criteria
For business markets, segmentation may consider industry, company size, location, organizational buying behavior, decision-making structures, strategic value, and regulatory requirements.
These segmentation bases can be combined to form multidimensional segments that allow more precise targeting and customization of marketing strategies. The criteria selection depends on the market context (B2C vs. B2B), product complexity, and the specific goals of the segmentation effort.
Another important criterion for market segmentation is determining which type of demand pattern a firm falls into. The difference between a fancy restaurant and a fast food chain, for instance, is an example of clustered demand. In contrast, the cosmetic market is an example of a market with diffused demand, where customers have a wide variety of choices and preferences.
Once the demand pattern and the profiling of the customer is ready, the market segment that should be targeted can be determined. This targeting can ultimately help with positioning.
For a deeper understanding of market segmentation, a video by Marketing91 is available on the topic. By understanding and applying these principles, businesses can tailor their marketing strategies to better meet the needs of their customers and achieve success in their respective markets.
[1] Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson Education. [2] Levy, M., & Weiss, A. (2015). The Essentials of Marketing. Cengage Learning. [3] Armstrong, G., & Kotler, P. (2017). Principles of Marketing. Pearson Education. [4] Lauterborn, R. F. (2000). Marketing. McGraw-Hill Education. [5] Fitzsimons, J. A. (2014). Consumer Behavior: Building Brands They’ll Love. McGraw-Hill Education.
- In the realm of business, a company's understanding of its target market's demand pattern, influenced by factors such as product variety and customer preferences, can pave the way for a more effective marketing strategy, as seen in the difference between a fancy restaurant and a fast food chain.
- To ensure a successful investment in marketing strategies, it's essential for businesses to align their activities with the specific needs and characteristics of their customers, whether that involves segmenting them based on demographics, psychographics, behavioral patterns, geographics, or B2B-specific criteria, for instance in the cosmetic market or in industries with complex regulatory requirements.
