Q.
What is a good market segment? What are the characteristics of a distinctive marketing segment?
A.
Market Segmentation is defined as:
"Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers, businesses, or countries who have common needs and priorities, and then designing and implementing strategies to target them. Market segmentation strategies may be used to identify the target customers, and provide supporting data for positioning to achieve a marketing plan objective. Businesses may develop product differentiation strategies, or an undifferentiated approach, involving specific products or product lines depending on the specific demand and attributes of the target segment."
Ref:
Wikipedia search 'market segmentation', available at
http://en.wikipedia.org/wiki/Market_segmentation
[What determines a distinctive market segment is a subjective question by owner of the business. A preconception of business in the old way would prefer segmentation of market by geographical or regional division rather than types of customer or demography. For example, in retailing business where there is no product differentiation, like selling milk powder, market segmentation of region like city, country or province is easily understood. City folks can pay more for milk powder, whereas country or province dwellers may be poor and hence rely on breast feeding.
Whatever said, there are some characteristics of good measurable factors in deciding a good segmentation variable - or base.]
Experts suggest that a market segment should be:
- Easily and clearly identifiable
- Measurable
- Accessible by promotion, communication and distribution channels
- Different in its response to a marketing mix
- Stable (not changing too quickly)
- Appropriate for the company’s policies and resources
- Substantial enough to be profitable
[Therefore, the more appropriate is to derive a set of variables (bases) fitting into the above requirements, the better is the identification of that market segment.
For example, in property segmentation, the target group can be 'Young Working Executives' and the above characteristics of market segment - young working executive should be:-
- Easily identifiable - young and working - IC birth date, occupation, profession.
- Measurable - age, salary brackets, number of members in family.
- Accessible - by Email, Social Media, Advertisement, SMS, face-to-face interview.
- Different in its response to a marketing mix - distinctively prefer Status Lifestyle Living
- Stable - the numbers of young working executives would stay almost constant with a small annual increase as jobs are increasing in a growing economy. Even in downturn, the executive group is also a better earning group than the general workers.
- Appropriate for business - by company's strategy to selling homes, the marketing direction of selling to young families fit well into its mission.
- Substantial enough to be profitable - most importantly, this segment would be able to continue affording the product and company will continue to make profit from selling to this segment.
With this variables identified, the business can develop a product best fit into the needs of this target group - market segment.]
Ref:
TIS Consulting Group. Market segmentation: basic strategies to identify segments and select a target market, available at
http://tisconsulting.org/news/market-segmentation-basic-strategies/
[x] own account.