Market segmentation strategy represents a major shift from the traditional ways of doing ways. It is a process of subdividing markets into smaller units that share some characteristics. This approach has been established to bear numerous advantages. The need to create segments has help tackle most of the problems that were encountered with the traditional business models. Many business entities have readily embraced the strategy.
The process of creating subunits is preceded by research. This is done in a bid to identify the specific needs of consumers and how these needs can be solved. Depending on the size of the market, the research may take days, weeks or months. The research also helps in determining the criteria that will be used in creating the required segments.
There are many ways that can be used to identify the required segments. These include the use of face to face interviews, questionnaires, telephone interviews and email surveys among others. The interviews are structured in a way that will help gather information on their bio data, their geographical location, and tastes and preferences. Customers who respond in a similar way are usually classified together since they are likely to be faced with the same challenges.
There are numerous criteria that can be used when segmenting. Commonly used characteristics include age, gender, consumer tastes and preferences and geographical location. Differences in age affect the type of goods that are demanded and it is important that a business appreciates this. The elderly tend to be rather resistant to change while the young are more likely to embrace changes in products and service delivery.
Gender also has a significant influence on the patterns of demand and supply. Men and women have varied tastes and preferences for different types of goods and services. Women are more likely to conform to changes in fashion while men are not. Also, women have been found to be more regular shoppers compared to their male counterparts. Producers of goods and services need to be aware of these differences.
Behavioural segmenting is done based on the knowledge of patients as related to the use of goods and services. Seasonal buying is a behaviour that affects many varied goods and services. The demand for some goods is high on some occasions or seasons and reduces once the occasion passes. For instance, Christian gifts enjoy increased demand during Christmas and Easter. The producer needs to factor this into the production process.
Another form of subdivision is the use of product or brand loyalty. It is important to know which customers are loyal to products and which ones are not. At the same time, there is need to establish the degree of loyalty; some are not as loyal as others. By identifying the groups of customers who are loyal it is possible to identify ways in which to reward them and to retain them. For those who are not so loyal ways of improving the loyalty can be identified.
Market segmentation strategy is a method that has greatly helped improve sales. By identifying specific consumer needs and addressing them, the consumers are happy and are more willing to spend. This is different from the traditional approach where all consumers were regarded as one large group in spite of the differences that exist among them.
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