Segmentation consists of group of buyers or a process of identifying groups of buyers who share similar set of need and wants. It is the breakdown of the market for a particular product or service into segments of customers, which differs in terms of needs, wants, lifestyle, religion, income level, gender, buying process etc, and their response to marketing strategies.
Today’s organisations need fresh thinking on how to operate and compete in the new economy characterised by hypercompetition, customization and digitalisation. An organisation cannot serve all the consumers in the entire market, the consumers are too many and are too diverse in their buying process. An organisation therefore, needs to identify the market segment(s) it can best serve.
Organisations been aware of these facts has been segmenting their products offerings to target a particular segment(s) of the market rather than using the old method of mass-marketing. This bring to fore the question of what are the likely trends that will arise as a result of market segmentation.
Business and marketing practices are changing. Instead of scattering their marketing efforts, organisations are embracing target marketing where they distinguish major market segments, target one or more of such segments, then develop products and marketing strategies targeted to each segment.
The likely future trends in segmentation techniques will be: Customization and customerization – Customization means a company is able to produce an individualize differentiated product, while customerization means a company is able to dialogue with their individual customers and has responded to their needs by customizing its products, services and messages on individual customer basis.
With development in technology, customers are taking individual initiative in determining how and what to purchase. Today, consumers want to design the product and service offering of their choice; this will drive segmentation to a new dimension as it will no longer be on information gathered by companies about the consumers but what the consumer himself designed.
Niche Marketing – Marketers identifies niches by dividing a segment into sub-segments. This give them the picture of an attractive niche where customers have distinct needs and are ready to pay a premium to the organisation that best satisfies those needs. Segments are larger, while niche are smaller and attract less competition. This form of segmentation is becoming attractive to many organisation and is likely to ‘turn the table around’ in its favour as many organisations will shift their attention to niche marketing in order to gain competitive edge.
Local Marketing – PZ Industries, a major producer of beauty and health care products provides different varieties of products across the country depending on the type of trading area. This is known as target marketing. This trend in segmentation is leading marketing programmes that are tailored to the needs and wants of individual local consumer groups. Many organisations may want to dabble into this trend of segmentation technique as a way of defending their territorial market dominance.
Digitalization/Connectivity and Disintermediation/Reintermediation – The digital world of new technological inventions have made easy the gathering, distribution and flow of information. Most organisations have turn to the world of dotcoms to segment and deliver their offerings. This trend will continue even at a faster rate as many organisations will segment their market into digital and non-digital market.
Customer-centred Segmentation – Most companies are now product-oriented in their offerings as for instance, a company producing two or more products will prefer assigning products managers or divisions to manage them than marketing groups that will address directly the needs of different customer groups. This trend is changing and will continue in future as more organisations will switch from being product-centred to being customer-segment centred.
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