Products seldom succeed by appealing to single, homogenous markets. Most markets are likely to include consumers with different lifestyles, backgrounds, and income levels. It’s unlikely that a single marketing mix strategy will attract all sections of a market. By identifying, evaluating, and selecting a target market to pursue, the firm is able to develop more efficient and effective marketing strategies. The target market for a product is the specific segment of consumers most likely to purchase a particular product. The people on the Internet provide a good example of how diverse a population can be.
The number of people navigating the Internet has grown, so has the diversity of the population. Before, only college students and technically oriented professionals are the ones using it, the World Wide Web’s audience now includes large numbers of women, minorities, and senior citizens. As a result, the number of people of World Wide Web sites targeted to specific demographic and special-interest groups has shown a corresponding increase.
Knowledge of consumer behavior differences help firms to formulate marketing strategies. For product, insight on consumer preferences on such factors as product size, shape, features, and packaging. Price; determine what should the initial price be discounts to be offered
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II. Definition of Market Segmentation Market segmentation according to my references is the process of dividing the total heterogeneous market for a product into several segments, each of which tends to be homogeneous in all significant aspects. Then select one or more market segments as target market. The firm develops separate marketing mix for each segment or group of segments in the market.
Markets feature a large and diverse population. Any attempt to attract all consumers with a single marketing mix would most probably fail. Consumers simply bring too many variables in consumer needs, preferences, and purchasing abilities. Instead, the firm attempts to identify the factors that affect purchase decisions, and then they group consumers according to the presence or absence of these factors. Finally, they adjust marketing strategies to meet the needs of each group. Take toothpaste as an example, nearly everyone uses it, yet toothpaste manufacturers have found that consumers have different ideas about what they’d like the product to do. As a result, Crest focuses on preventing tooth decay, Close Up hints at enhanced sex appeal, Gleem emphasizes whiter teeth, and Colgate Junior is designed to appeal to kids while satisfying parents’ concerns for fluoride protection.
III. Advantages of Market Segmentation 1) Market segmentation identifies customer needs within a segment and then satisfies those needs. 2) It allows for tailoring of market programs to individual market segments, thus a firm can do a better job and make more efficient use of marketing resources. 3) It also results a rapid growth rate when the firm has a stable position on the market segment. 4) Market segmentation present measurable purchasing power and size. 5) It identifies and presents a segment or segments that exhibit good profit potential.
6) Market segmentation attempts to isolate the traits that distinguish a certain group of consumers from the overall market. IV. Nature of Business Market Like final consumers, an organization purchases \products to fill needs. However, its primary need-meeting the demand of its own customers-is similar from organization to organization. A manufacturer buys raw materials to create the company’s product, while a wholesaler or retailer buys products to resell. Companies also buy services from other businesses. Institutional purchasers like government agencies and non profit organizations but things to meet the needs of their constituents.
Business buying decisions, while handled by individuals, occur in the context of formal organizations. Environmental, organizational, and interpersonal factors are among the many influences in business-to-business markets. Budget, cost, and profit considerations all play parts in business buying decisions. In addition, the organizational buying process typically involves complex interactions among many people and among individual and organizational goals.
The business-to-business market is a diverse one. Transactions can range from orders as small as a package of paper clips or copier toner for a home-based business to deals as large as thousands of parts for an automobile manufacturer or massive turbine generators for an electric power plant. Businesses are also big purchasers of services, such as telecommunications, computer consulting, and transportation services.