Types of market segmentation

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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 (e.g. 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

Labor Market Segmentation

Labor market segmentation is defined by us as a historical process whereby which political-economic forces encourage the division of the labor market into separate submarkets, or segments distinguished by behavioral rules and different labor market characteristics. Segmented labor markets are the outcome of a segmentation process and they may cut horizontally across and vertically the occupational hierarchy. That present labor market conditions may be understood as the outcome of four segmentation processes[1]:

  • Segmentation into Primary and Secondary Markets - The primary and secondary segments are differentiated mainly by stability characteristics.
  • Segmentation Within the Primary Sector - In the primary sector we see a segmentation between what we call "independent" and "subordinate" primary jobs.
  • Segmentation by Race - Certain jobs are "race-typed," segregated by labor market institutions, prejudice. "Geographic separation plays an important role in maintaining divisions between race segments"[2].
  • Segmentation by Sex - Wages in the male are usually higher than in comparable female jobs.

International Market Segmentation

"Market segmentation is in many respects outgrowth of the marketing concept"[3]. Both domestic and international markets, segmentation means breaking down the market for a particular product or service into segments of customers. The firm may adapt its marketing policies to the needs of each specific segment, wanting to obtain more favourable response and bigger profits than by following a uniform strategy aimed at the entire market. The advantages of segmentation In international markets appear potentially at least as great than in domestic markets because of differences in the economic, cultural and political environment between various countries. Information on international markets can be organized and collected by segment.Management of abroad activities can be administered by segment and the segment may provide the right unit for control and evaluation[4].

Examples of Types of market segmentation

  1. Geographic Segmentation: This is a form of segmentation based on geographic variables such as region, state, city, or country. For example, a clothing retailer may target customers in the same city or region with specific marketing campaigns.
  2. Demographic Segmentation: This type of segmentation is based on demographic variables such as age, gender, income, occupation, and education level. For example, a skincare company may target women between the ages of 18-35 who have higher incomes, since these women are more likely to purchase their products.
  3. Behavioral Segmentation: This type of segmentation is based on a consumer’s buying behavior, such as their preferences, beliefs, and attitudes. For example, a car company may target consumers who are looking for a fuel-efficient vehicle, since these consumers are more likely to purchase their cars.
  4. Psychographic Segmentation: This type of segmentation is based on a consumer’s lifestyle and personality. For example, a luxury watch company may target consumers who are interested in luxury goods and enjoy living an affluent lifestyle.
  5. Product-Related Segmentation: This type of segmentation is based on a consumer’s relationship with a product or brand. For example, a phone company may target consumers who are loyal to their brand, since these consumers are more likely to purchase their products.
  6. Value-Based Segmentation: This type of segmentation is based on a consumer’s perceived value of a product or service. For example, a restaurant may target consumers who are willing to pay a premium price for high-quality food, since these consumers are more likely to become repeat customers.

Advantages of Types of market segmentation

One of the most effective ways to understand and target potential customers is through market segmentation. Market segmentation can be used to identify various types of consumer groups and their unique characteristics. Here are some of the advantages of using different types of market segmentation:

  • Geographic segmentation is the practice of segmenting markets based on location. This type of segmentation allows businesses to tailor their marketing and products to local needs and interests, as well as target customers in specific geographical areas.
  • Demographic segmentation is the practice of segmenting markets by characteristics such as age, gender, income, and lifestyle. By segmenting markets by demographics, businesses can better understand the needs of their customers and develop products and services that meet those needs.
  • Psychographic segmentation is the practice of segmenting markets based on the psychological characteristics of customers, such as values, attitudes, and interests. By understanding their customers’ psychological traits, businesses can create products and services that appeal to them.
  • Behavioral segmentation is the practice of segmenting markets based on customers’ behavior. This type of segmentation allows businesses to identify customers’ purchasing habits, such as frequency and amount of purchases, to better understand their needs.
  • Benefit segmentation is the practice of segmenting markets based on the benefits customers seek from a product or service. By understanding the benefits customers are looking for, businesses can create products and services that meet those needs.

Limitations of Types of market segmentation

An introduction to the types of market segmentation is important to understand the limitations associated with them. The limitations of types of market segmentation include:

  • Geographic segmentation - This type of segmentation is limited by the fact that it may overlook differences between regions, cities, and states that could be important to the success of a marketing campaign.
  • Demographic segmentation - This type of segmentation is limited by the fact that it may overlook differences between individuals within a demographic, such as their lifestyle or interests.
  • Psychographic segmentation - This type of segmentation is limited by the fact that it may overlook differences between individuals within a psychographic group, such as their attitudes or beliefs.
  • Behavioural segmentation - This type of segmentation is limited by the fact that it may overlook differences between individuals within a behavioural group, such as their motivations or preferences.
  • Benefit segmentation - This type of segmentation is limited by the fact that it may overlook differences between individuals within a benefit group, such as their needs or values.

Other approaches related to Types of market segmentation

Market segmentation is a process by which businesses divide their products or services into distinct categories and tailor their marketing efforts to each segment. There are several types of market segmentation which can be used to better understand and target customers, including:

  • Demographic Segmentation: This strategy divides consumers based on tangible characteristics such as age, gender, education level, income level, and geographic location.
  • Psychographic Segmentation: This approach considers the lifestyle choices and attitudes of customers, such as their values, aspirations, and interests.
  • Behavioral Segmentation: This approach looks at how customers interact with products and services, such as frequency of purchase, brand loyalty, and product usage.
  • Geographic Segmentation: This strategy allows businesses to divide their markets based on geographical criteria, such as region, city, or neighborhood.
  • Benefit Segmentation: This approach segments consumers based on the benefits they seek from a product or service, such as convenience or cost savings.

In summary, market segmentation can be used to better understand and target customers by dividing them based on demographic, psychographic, behavioral, geographic, and benefit characteristics.


Types of market segmentation — recommended articles
Global marketing strategy — Selection of target markets — Market segmentation process — Perceived quality — Segment of the market — Market niche strategy — Beachhead market — International marketing mix strategy — Internationalization

References

Footnotes

  1. ↑ M. Reich, D.M. Gordon, R.C. Edwards (1973), p. 359-360
  2. ↑ M. Reich, D.M. Gordon, R.C. Edwards (1973), p. 359-360
  3. ↑ Y. Wind, S.P. Douglas (1972), p. 17-25
  4. ↑ Y. Wind, S.P. Douglas (1972), p. 17-25

Author: Agnieszka Pytel

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