One of the most important pillar of marketing strategy
is ‘Market Segmentation’ that is dividing a market into distinct groups of buyers with different needs, characteristics,
or behaviour that may require separate products and marketing strategies ( Kotler & Armstrong, 1999). The two steps involved
in it are first, naming a broad product-market that suits firm’s resources and disaggregating all possible needs into
some generic markets. Secondly, segmenting these broad product-markets in order to select specific target markets (Perreault
& McCarthy, 2000)
There is an ongoing agreement that no one type of
market segmentation is comparatively more effective than the other (Papers4you.com, 2006). Industries and companies around
the globe has proved that according to firm’s resources, effective utilization of any market segmentation on ‘proactive
basis’ has lead to capture profitable opportunities. Many types of segmentation are discussed in literature, however
practically, two major types are commonly known as Single- Target Market Approach and Multiple Target-Market Approach.
Companies has gained edge by even adopting ‘
Single Target Market Approach’ that involves segmenting the market and select one of the homogenous segment as the company’s
target market ( Quester et al, 2001). Practical examples were also highlighted as, for instance in Australia, National Australia
Bank (NAB) and Coles super markets availed edge over competitors by proactively targeting new homogenous target market known
as ‘super consumer’. This segment has specific characteristics such as connected to internet, own a mobile phone,
spend large amounts on fashion items, go to restaurants and have cable TV subscription. NAB attracted this new segment by
offering easy to use online banking service, however, Coles offered 24 hours shopping, comparatively huge range of ‘up-market’
cooked meals and tailor-made fresh food items on demands of super consumer (Papers4you.com, 2006).
Similarly company can adopt ‘Multiple Target
Market Approach’ that involves choosing two or more market segments and then taking each of them as different a separate
target market to develop marketing strategy (Quester et al, 2001). It is also referred as ‘Benefit Segmentation’
where each divided segment is taken as benefit group on the basis of benefits that segment seek from company (Kotler &
Armstrong, 1999). Companies also used such segmentation as tool for capturing new opportunities in a effective way. For instance
effective service providers in gym industry are realizing that unlike in 1980s where aim of gym membership is to make better
appearance is being added by the market concerned with health issues such as heart diseases, posture and BP. So service providers
who proactively realized changing trend in market quickly shifted from single market approach to multiple one by offering
different products for different groups such as normal fitness services to appearance conscious group and health related expensive
services to elite class with high rates (Quester et al, 2001).
Hence the discussion shows that market segmentation
is imperative for developing marketing strategy and can be used as an effective tool to gain edge , however key here is adopting
‘ proactive approach’ to realize changing trends.
References
Kotler, P & Armstrong, G, (1999), ‘Principles
of Marketing’, Eight Edition, New Jersey: Prentice- Hall Inc
Quester, P, G, McGuiggan, R, L, McCarthy, E, J &
Perreault, W, D (2001), Basic Marketing- A Managerial Perspective’, Australia:
McGraw Hill Book Company Australia Pty Limited
Papers For You (2006) "C/M/316. The benefits of
segmentation", Available from http://www.coursework4you.co.uk/sprtmrk6.htm [19/06/2006]
Papers For You (2006) "K/M/10. Explore the theories
surrounding the core marketing principle of Segmentation, Targeting and Positioning", Available from http://www.coursework4you.co.uk/sprtmrk6.htm [19/06/2006]
Perreault, W, D & McCarthy, E, J, (2000), ‘Essentials
of Marketing- A Global Management Approach’ International Edition, USA:
McGraw Hill Companies Inc
