Market segmentation should not be based on guesses and hunches. It should be a systematic process consisting of the following steps.1. Market Survey/ information Collection: Segmentation requires a thorough investigation of the total market characteristics. Marketing survey is conducted for this purpose. Information is collected on the following aspects:
- Customer needs and characteristics
- Brand awareness and ratings of customers
- Product attributes desired by customers
- Customer attitudes toward the product
- Preference patterns of customers
2. Segment Identification: Detailed analysis of the information collected from the market survey is done. Appropriate statistical tools are used to make the analysis.
Factors affecting product demand are classified into major and minor factors. The major factors are further analyzed in relation to: i) buyer need, ii) buyer characteristics.
Homogeneous groups of customers are clustered to identify segments. Cluster analysis tool can be used for this purpose.
3. Segment Profiling: The variables for segmentation are identified. They can be geographic, demographic, psycho graphic, and behavioural. They vary according to the type of market.
Each segment is profiled in terms of similarities and dissimilarities in demand and characteristics of customer groups. When this process is completed, the organization has identified segments. They represent micro markets.
4. Segment Selection: From different segments, Organization select one or more segments after careful evaluation. The chosen segments become target market.
5. Product Positioning: Last process of market segmentation is product positioning. Positioning is a new thinking in marketing. Marketers should position and reposition their products to satisfy the needs of the customers. Each product should be distinctively positioned in the mind of consumers.
Factors affecting product demand are classified into major and minor factors. The major factors are further analyzed in relation to: i) buyer need, ii) buyer characteristics.
Homogeneous groups of customers are clustered to identify segments. Cluster analysis tool can be used for this purpose.
3. Segment Profiling: The variables for segmentation are identified. They can be geographic, demographic, psycho graphic, and behavioural. They vary according to the type of market.
Each segment is profiled in terms of similarities and dissimilarities in demand and characteristics of customer groups. When this process is completed, the organization has identified segments. They represent micro markets.
4. Segment Selection: From different segments, Organization select one or more segments after careful evaluation. The chosen segments become target market.
5. Product Positioning: Last process of market segmentation is product positioning. Positioning is a new thinking in marketing. Marketers should position and reposition their products to satisfy the needs of the customers. Each product should be distinctively positioned in the mind of consumers.
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