Relationship between Consumer Heterogeneity and Market Segmentation:
Market segmentation is regarded as the process in which markets are divided into groups according to the needs of the consumers. After this process marketing mix is designed to represent each segment according to the needs of the consumers. In terms of heterogeneous markets market segmentation plays an important role. Consumer heterogeneity on the other hand refers to individuals having different product needs and according to which heterogeneous markets are created (Kotler and Armstrong, 2008). In order to have effective segmentation it is important that the needs and requirements of the consumers for the product should be heterogeneous.
Implementation of Segmentation Process
Markets are divided into segments on the basis of segmentation variables. These variables are categorised on the basis of groups, individuals and organisations. Segmentation process should be implemented only if segmentation variable is in accordance with consumer’s needs and type of the product. The segmentation variable should be measurable and the number and size of variable should be in compliance with the organisation’s resources. Types of segmentation variables are as follows (McDonald, 2012):
This type of segmentation variable includes segmenting markets on the basis of race, gender, education, family size, income, ethnicity, age, social class and religion. Consumer needs and purchasing behaviour are identified through demographic characteristics and thus are mostly preferable by marketers.
Customers can be differentiated from one region to another on the basis of geographic variables such as population density, city size, climate etc.
In order to segment markets psychographic variables such as personal characteristics, motives and lifestyle segmentation are used by the marketers.
With respect to the consumer behaviour towards a product marketers divide or segment market.
Developing market segment profiles is another step in STP process in which similarities among potential customers are being described within a segment. Along with this market segment profile relates to geographic factors, lifestyles, demographic characteristics, product benefits, usage rates and brand preferences. It is important for the marketers to segment profiles in order to get better understanding about the ways by which customers needs and requirements can served by organisations using its capabilities. It can be said that a description of each segment and potential consumers is being presented in segment profile by the marketers. Segment profile helps marketers to develop products according to the needs and requirements of the consumers. Moreover, it also allows developing communication messages to attract consumers and then distributing products and services with the help of an effective distribution channel. Selecting a target market, it is important for the marketers gain knowledge for different areas such as core needs of the customers, what brands they use, their brand loyalty etc. After getting knowledge regarding all these aspects marketers can develop a suitable and relevant marketing mix and positioning strategy.
Marketing Strategies Used by the Marketers for Targeting Purpose
There are various marketing strategies used by the marketers for targeting purpose which are as follows (Weinstein, 2013):
Undifferentiated marketing: This type of marketing strategy also known as mass marketing strategy focuses on a wide range of customers. As per this strategy a marketing program and a product is designed that covers a large range of potential buyers. The main aim of the marketers while designing this strategy is that people have similar needs and thus the communication will spread to all the customers regarding the product. Economies of scale are governed by promotion costs, production and research and thus this strategy proves to be successful.
Differentiated marketing: This type of marketing strategy signifies developing products for different customer groups. Thus, several market segments are targeted and separate offers are designed for them. This type of marketing strategy is significant when customers have to choose among different brands and each of them has a distinctive identity in the marketplace. Higher sales and sustainable marketing position can be gained by the companies by offering product and marketing variation to segments.
Concentrated marketing: one or more products to a single segment are offered by the firms in this strategy. The firm in this strategy targets niches or a few segments and are profitable to those firms which have few resources to invest.
Micromarketing: In this strategy, marketing programs and products are designed as per the requirements of the local customers. There are two types of strategies involved such as individual marketing and local marketing.
Local marketing: in this type of strategy local customer groups needs and requirements are being focused.
Individual marketing: relating to the needs and wants of the individual customers product and marketing programs are being developed by the firms. For instance, mass customisation is an approach in this regard in which firms interact with customers to develop customised products.
Role of Positioning Statement in Designing an Effective Positioning Strategy
Product positioning is an important criterion
that marketers adopt during the process of segmentation. In this process, a
marketing program is being developed in which image, product attributes,
packaging, distribution, price and services are included. Important of product
positioning for the marketers is quite relevant as it helps in evaluating the
dimensions by which consumers make purchasing decisions as well as their
perceptions regarding the product. Positioning statement can be thus designed after
consumers perceptions are being understood (Graham, 2008). Product position is
analysed by the marketers with the help of perceptual maps in which perceptions
of consumers regarding brand, product and organisation is being stated. The
importance of perceptual mapping or positioning map is that it helps in
analysing the most important feature of consumer decision making which are then
used by the firms to design products and advertising programs. Moreover, with
the help of perceptual mapping, firms get to know where there brands are weak
and where there rivals are strong. Thus, it helps in locating the state of
their brand in the minds of the consumers (Lhotáková, and Olšanová, 2013). Along
with this, it also helps in finding out the potential market opportunities for
the firm. Thus, marketers can make strategies for establishing new brands or
repositioning the existing ones.
Graham, H. (2008). Marketing Strategy and Competitive Positioning. Pearson Education.
Kotler, P. and Armstrong, G. (2008), Principles of Marketing, 13th ed., Pearson: Prentice Hall.
Lhotáková, M., and Olšanová, K. (2013). The role of positioning in strategic brand management – case of home appliance market. G.J. C.M.P., 2(1), pp. 71-81
McDonald, M. (2012). Market Segmentation: How to Do It and How to Profit from It. John Wiley & Sons.
Weinstein, A. (2013). Handbook of Market Segmentation: Strategic Targeting for Business and Technology Firms, Third Edition. Routledge.