Market Segmentation-A Power Tool

A product’s success can be attributed to it’s delivery to the right market. The right market or your target market is the set of buyers where a product is perceived to have more profit and potential growth. The product’s promotion, price and delivery should be considered within the target market’s preferences.

Selecting the target market and delivery of the product is not a one-step process but a sequence of processes that needs to be done every so often. The first step involves market segmentation. This involves dividing the broad market into segments according to their needs and behaviors. Let us say, hypothetically, that a company is involved in the manufacture of apparel for women-the broad market. Since apparel style preferences of women differ, it is decided to segment the market by classes that have purchasing power-college students, working women and housewives. After research and profiling, it is proven that the college students segment is less broad and where competition is lesser. So, it is perceived that the college student segment has more potential in profit and is established to be the target market.

The next step involves deciding on the quality and price of the apparel. The research and profiling showed that the target market is sensitive to price and quality. Two segments-one that requires cheap apparel and the other, quality apparel, were formed. With this, it is recommended to product development to produce two kinds of apparel, cheap apparel and a higher-priced quality apparel.

The last step involves advertising and distribution. Again, research showed that the target market has different shopping behaviors. The market was divided into segments-mall/store shopping and online shopping, this point according to shopping behavior. Percentage for online shopping showed to be material so, online advertising and distribution were done aside from the traditional mall distribution and vicinity advertising.

Segmentation is a powerful tool if used correctly. However, it does not follow that each segment of the target market must be addressed. This should depend on the company’s resources and goals/visions. Moreover, segmentation and target marketing should not be done as a one time process because of changing needs and competitor strategies. It should be done often to adapt to these changes for the product to obtain a large share in its target market.