Types of market segmentation
| 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].
References
- Fred van Raaij, W., & Verhallen, T. M. (1994). Domain-specific market segmentation. European Journal of Marketing, 28(10), 49-66.
- Reich M., Gordon D.M., Edwards R.C. (1973), Dual Labor Markets: A Theory of Labor Market Segmentation, „Economics Department Faculty Publications”, nr 3
- Wind Y., Douglas S.P. (1972), International market segmentation, "European Journal of Marketing", nr 1
Footnotes
Author: Agnieszka Pytel
