Discussion Question Chapter 3: Purpose and Benefits of Segmentation
In order to understand the purpose and benefits of segmentation, it’s helpful to step back momentarily and look at markets as a whole and how segments help us understand a market. A market is a group of potential buyers with needs and wants, as well as the purchasing power to satisfy those needs and wants. These buyers might be individuals, groups, businesses, or organizations. The “total market” constitutes all the potential customers for a given product. Potential customers share a common problem or business need that your product can address, and they share other characteristics as well.
First peer response belowWhen the organization is releasing a product on the market there is many ways for said organization to research and understand their prospective customers and how to serve them. Most companies have a marketing planning process where in this lies the corporate mission. Within the corporate mission there is a situation analysis which consists of internal and external factors such as strengths, weaknesses, opportunities and threats (SWOT) listed. Also, the companies objectives and tactics for marketing the product, coming up with a suitable price, any promoting of the product and where the item can be sold at to the target market. The company has the knowledge and focus on the unique benefits in their product or service and they must have the strategy to clarify and define the unique value of the product to the prospective buyer. The organization will have the tactics such as the tasks of creating, delivering and expanding the value to help them avoid clouding their market. Corporations use many different types of approaches to study and research their target customer such as geographics, demographics, psychographic, behavior of the buyer and whether or not the customer is the household decision maker which these are all dependent on the nature of the product. Since segmentation is the process of dividing potential customers into groups to better understand their needs and wants, an organization/person will try and margin their product in the ideal market segments. They will prepare before the product hits the market and make sure that the target customers can buy the product and will want or need to purchase it. That the ideal buyer is willing to and has the authority to buy said product. And the bottom line of any mission statement that explains why an organization exists which is profit! Is the product going to be large enough to be profitable to the marketer? These are many tactics that a person/organization can use to maintain a viable market for your product.Thank you
Second peer belowMarket segmentation doesn’t need to be complicated to be effective. There are five primary steps of segmentation. Some things a person/organization can do to prevent the criteria above from happening is 1. Conduct preliminary research- get to know your customers better by asking some initial, open ended questions. 2. Determine how to segment your market- decide which criteria you want to segment your market by. 3. Design your study- Ask a mix of demographic, psychographic, and behavioral questions. Be sure to make your questions quantifiable. 4. Create your customer segments- Analyze your responses either manually or with statistical software to create your segments. 5. Test and iterate- Evaluate your segments by ensuring they are usable and helpful. If they aren’t, try segmenting based on other criteria.After you determine your segments, you want to ensure they’ll be useful. A good segmentation analysis should pass the following test: Measurable, measurable means that your segmentation variables are directly related to purchasing a product. Accessible, understanding your customers and being able to reach them are different things. Substantial, The market segment must have the ability to purchase. Actionable, the market segment must produce the differential response when exposed to the market offering.Market segmentation is not an exact science. As you go through the process, you may realize that segmenting based on behaviors doesn’t give you actionable segments, but behavior does. You’ll want to iterate on your findings to ensure you’ve found the best fit for the needs of your marketing, sales and product organizations.