MARKET DISCRIMINATION (SEGMENTING YOUR MARKET)

Market discrimination or Market segmentation is the practice of breaking down buyers or users of a product into smaller, more homogeneous divisions that can be satisfied with one marketing mix.

Marketing segmentation is at the very heart of the entire discipline of marketing, itself described basically as:

The set of activities in which the supplier first determines what is needed or wanted and then tries to provide the requirement at a profit.  

As can be seen, both segmentation and marketing clearly address the issue of customer satisfaction.

Marketing practitioners are expected to do market segmentation because it is their recognition that greater sales, and thus a more predictable, secure future in the ultimately belongs to the organisation that is able to meet customer desires.

Rather than assume that anyone that needs transport, for example, is ready to accept any vehicle, wise business people try to understand if there are any specific types of automobile that are preferred above others by some groups within the market for transport products. They do indeed come up with such classifications as utility vehicle and executive car.  

Main Benefit of Segmentation

Segmentation enables the marketer to raise chances of good performance, as they can devote energies to addressing special requirements. This contrasts with trying to present one product for all sub-classes in the market, as competitors who concentrate on the unique needs of smaller groups might out-do them.   

What determines segments?

The degree of importance to a particular market, of each possible criterion, is what makes it necessary or unnecessary to consider a classification candidate for market segment. There are other factors, next, to look at, which include:

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     Profitability. Does the grouping represent a return that makes business sense.

   Reachability. Is the segment easy to connect with physically and by way of other marketing communications tools like advertising and sales promotion?

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            Definability and measurability. If it is not distinguishable, it might be difficult to reach. And if it cannot be quantified, its commercial value might be impossible to establish.

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     Uniformity. The segment members must respond the same way to different offerings.

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Stability. Over the long term, the segment must remain basically undiminished in key elements like potential size of business.

Lines of Segmentation

There is no limit to how a market can be segmented. If your market were cyclists, lines of segmentation might include pursuit racers and mountain climbers. If you sold fire-fighting equipment, divisions might be, obviously among others, single-storey fighters and those who need facilities for between one and three floors.

For many consumer (non-business) products, broad bases of segmentation have often been demographic (for example, age, gender, income and education); geographic (describing where different customers are found); psychographic (profiling personal mental make-up in areas like attitudes, norms and values); and behavioural (dealing with activity patterns like when people sit down to watch TV).

Two Marketing Challenges in Segmentation

1)    Needs/wants versus product attributes. Segmentation is not a preserve of any single business. So, there is likely to be competition already, or sooner rather than later, in any market segment. It means a marketer has to aim at satisfying customers better than the others. One way is to match product attributes with segment characteristics more closely than the competition does.

    

2)    One niche or more? Segmentation does not imply a firm concentrating on only one sub-group of customer. It can go after two or more. However, it has to possess the capacity to be competitive, or develop it. The more the segments picked, the more the resources to be committed. However, there would be gains like greater revenue, diversification of risk and stability of income (for instance, if some segments are highly vulnerable to seasonal sales fluctuations).

Occurrence of Segments

Market segments present themselves in different ways. We share with you only two simplistic examples. In figure WC, the market for winter coats in country C has 100 customers, of whom 30 prefer the product in green colour and 33 in blue. The segments are totally independent of each other.

Figure WC: Market segments for green and blue winter coats in country C.

The second example, figure WC1, shows the same information as figure WC, but with the addition of a new segment, for purple winter coats. Its membership consists of 10 who also like green; 12 who also can wear blue and 11 who exclusively prefer purple. The total size of the purple colour segment is 33. In this representation, of course, the blue and green segments have a connection via their members who also like purple.

 

Figure WC1: Market segments for green, blue and purple winter coats in country C.

 

The two illustrations are intended only to free the mind of any restrictions in looking at how segments configure themselves.

Conclusion

Paying attention to special, uniform requirements of smaller parts of a market can be the first step to delivering better customer satisfaction. The approach is applicable to both profit and not-for-profit bodies.

                Rupert Chimfwembe 3                               February 2017.