Types of market segmentation
There are several types of market segmentation:
- One-segment concentration - company chooses only one market segment, the most suitable for it and concentrates all marketing activities on it and adapts its offer to it. Thanks to this method, the company gains extensive knowledge about a given segment and is able to adapt its offer to it. This technique works exceptionally well for small businesses. They gain thanks to the fact that large enterprises are not able to concentrate on the needs of niche segments. The disadvantage of this technique is the relatively high risk associated with dependence on one segment.
- Selective specialization - consists in selecting several partial markets and concentrating a different marketing and product strategy on each of them. This technique is used by many enterprises that have been successful on one market and expanded their activities to include new markets, reducing the risk of activity resulting from single-segment concentration. It is a less risky method, because the risk is spread over several segments, and profits obtained from profitable segments can be used to support unprofitable segments.
- Product specialization - focuses on producing one commodity and supplying different markets with its varieties. Such specialization allows you to develop a reputation in the field of a given product. The risk in this fragmentary market can be called the emergence of new technology or the entry of a large competitor on a given market.
- Market specialization - consists in reaching only one market segment (eg mining) and providing it with the majority of necessary products. This makes it easier to achieve a strong position in the segment. However, such a choice of specialization in the market is always exposed to the risk of lowering sales, as a result of the decrease in the purchasing power of this segment.
- Geodemographic segmentation - based on localisation and demography of customers
- Fred van Raaij, W., & Verhallen, T. M. (1994). Domain-specific market segmentation. European Journal of Marketing, 28(10), 49-66.
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