segmentation in marketing definition

segmentation in marketing definition

Market segmentation is the marketing operation that consists in dividing a market into homogeneous sub-markets.

segmentation in marketing definition

Determination of product-market pairs

The so-called "targeting" segmentation or determination of product-market pairs aims to qualify and quantify the one-to-one relationship that may exist between the product and its market.

Segmentation into subset is carried out through a multi-criteria study or correlation research: gender, category, age, CSP, level of education, purchasing power, household size, number of children, place of residence, sports played, profession, etc.

For example, for the product-market combination associated with the "city shoe" product, four subsets appear that can correspond to 4 market profiles: the children's market, the teenagers' market, the women's market and the men's market.

Each of these product-market pairs must be the subject of the company's contribution:

a strategy, its long, medium and short term choices;

the development of the marketing mix and the commercial policy to be implemented according to the options taken.

These breakdowns are implemented on the basis of information collected by quantitative surveys, for example (with two types of questions/answers) on consumption behaviour and specific characteristics. It is then possible to perform an RFM ranking (Recency, Frequency, Amount) to find the company's target (the group of people who have the same expectations of the product).

The targeting segmentation criteria can be:

• Socio-demographic (gender, household size, income, education level, etc.)

• Geographical (location, climate, type of housing...)

• Psychographic (opinions, lifestyles, attitudes, beliefs, personalities...)

• Behavioural (quantities consumed, benefits sought...)

• Relating to the situation (profitability, use)

• Relating to the type of consumer (prescribers, buyers...)

Determination of the positioning of the offer

Consequently, the question of positioning arises to articulate between them all the offers as relevant and to be activated by an organization.

How can we meet customer expectations and exploit market opportunities without dispersing, but on the contrary by making the company's strengths work as coherently as possible? The answer to this question determines the company's positioning.

The positioning is optimized under the constraint of several parameters:

consistency with the overall brand image

adequacy with the sources of volume and revenue gained from competition by obtaining new customers

building a relevant marketing mix in terms of Product, price, promotion (communication) and space (distribution).

achieving economies of scale by sharing the organization's responsibility.

The control of positioning and product-market combinations is clearly a key success factor. For large companies with several business lines (generating specific synergies and flexibilities) a segmentation by DAS is preferable. Otherwise, marketing segmentation may be sufficient to find and develop all potential synergies between the company's resources.

Implementation of relationship marketing

Once the product-market pairs have been established, and the explicit positioning, the question and detail of the relationship with the customer (or relational marketing) and in particular the marketing can be further developed by using a new categorisation effort:

1. category of personalized marketing (one to one or B to B) which takes each customer as a customer in its own right.
2. concentrated marketing category related to a single segment.
3. differentiated marketing category related to several segments.
4. undifferentiated marketing category that is not segmented (case of monopolies, commonplace products, or standards)

Depending on the category concerned, the organisation and deployment of concrete operations (relationship marketing and marketing) are managed specifically.