Targeting, Segmentation And Positioning A Market Segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. A true market segment meets all of the following criteria: it is distinct from other segments (heterogeneity across segments), it is homogeneous within the segment (exhibits common attributes); it responds similarly to a market stimulus, and it can be reached by a market intervention. Market Segmentation is the processing of the characterizing a market into distinct subsets (segments) that behave in similar ways or have similar needs. The segmentation process in itself consists of segment identification, segment characterization, segment evaluation and target selection. If each segment is fairly homogeneous in its needs and attitudes, it is likely to respond similarly to a given marketing strategy. If you are the high-value supplier in your industry, you should be looking for the customers who are the high-value suppliers in their respective markets. Broadly, markets can be divided according to a number of general criteria, such as by industry or by public versus private sector. Generally segmentation is conducted using demographic, geographic, attitudinal or behavioral data. Small segments are often termed niche markets or specialty markets. The process of segmentation is distinct from targeting (choosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behavior; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Improved segmentation can lead to significantly improved marketing effectiveness. Distinct segments can have different industry structures and thus have higher or lower attractiveness. With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased
* Psychographic variables are any attributes relating to personality, values, attitudes, interests, or lifestyles. They are also called IAO variables (for Interests, Attitudes, and Opinions). The categories of psychographic factors used in market segmentation include: Social class, Lifestyle, Behavior, Opinions, and Values. Psychographics can also be seen as an equivalent of the concept of ‘culture’ as used most commonly in national segmentation. Psychographics is in essence, the study of personality, values, attitudes, interests, and lifestyles.