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What is Market Segmentation and Target Market?

We have defined Market as an institution or a mechanism allowing buyers and sellers to make exchanges. It has a Place concept which refers to a convenient meeting place for buyers and sellers for making exchanges. It emerges into an Area where two or more individuals have unmet needs, have products for exchange and there is a mode of communication. For example, business via internet, stock market where face to face meet is not necessary. Market is also interpreted under Demand Concept which refers to the total demand. The buyers are willing to pay for the product to satisfy their need.

We all know that the wants and demands of consumers are never the same. Each person will react differently to price, advertising, product features. Organizations cannot make all kind of products that meet wants and needs of all the consumers in the market. It will be very difficult to serve them effectively and efficiently amidst competition.

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Explain Mass Marketing, Product Differentiated Marketing and Target Marketing?

1) Mass Marketing involves targeting all the buyers in the market using same marketing mix to influence buying. The organisations believe that the buyers will exhibit same buying behaviour for their product and marketing program (marketing mix, 4P’s). This strategy is more likely followed in new markets than in mature markets where competition exists. In these markets, the buyers have not developed any variation in needs and wants.

Mass market strategy is cost effective as market research doesn’t involves understanding various potential customers. The organisation implements the same marketing mix and product development strategies for the market. This leads to attractive profits by taking advantage of economies of scale. There is no special attention to specific needs of the buyers.

Its features –
• Mass Production
• Mass distribution
• Mass promoting the same product to all customers.

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Explain the levels of Market Segmentation and outline the Importance/ Need / Benefits of Market Segmentation or Target Marketing.

Mass marketing can work but not always and not in most of the markets. Maruti Suzuki offered it Maruti 800 model for quite a few years in India as part of its Mass Market strategy. It is cost effective marketing as the firm doesn’t need to create offering tailored to different needs in the market. The firm starts losing business by the entry of competitors that offer a product which meets the needs in a better way,

Organisations follow market segmentation strategy to better serve the needs of the market. Market segmentation has the following levels that are practised basis the market opportunity and Business objectives.

1) Segment marketing – Organisations target one or more segments within a market. Each target market is offered a different marketing program. This strategy is referred to as Segmentation Strategy. Buyers with similar buying characteristics and needs are grouped together. Basis the organisations strengths, competitive advantage, and objectives, the firm can venture into a single segment or more. Instead of a single offering for the entire market, a firm offers products based on the different segment requirements.

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Explain Bases of Segmentation / Segmentation variables for consumer markets.

Each market offers a unique opportunity for marketers to form segments. As all the customers show different buying behaviour, marketers group the customers in segments to target them via marketing functions. The basic idea is not to serve the entire market but identify a segment that the organisation can best cater to. The marketers identify certain criteria to group customers together. There is not a single way of segmenting the market so the marketers study different variables. Following are the bases/ variables that are mostly followed for market segmentation. An individual in a segment will mostly exhibit the same behaviour as compared to any other individual or individuals in the same segment.

1) Geographic segmentation – the market classification is done basis the geographical area. People in different geographical regions display different characteristics. The division is done basis continents, nations, states, regions, districts. The company needs to cater to the needs as per the preferences of consumers in that region. For example, a coffee maker can advertise throughout the year in cold regions. Similarly, fast food chains like McDonald’s had to introduce vegetarian offerings with local flavours (non-beef, spices, etc.) in countries like India. The marketers also study the population density in the towns and villages to understand and forecast the sales.

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Explain the process of Market Segmentation?

Below steps are mostly followed to segment the market.
1) Segmenting the market using the Segmentation variables. The marketers should clearly define a segment such that it doesn’t exhibit the characteristics of a different segment. The individuals in the group or segment should more or less have common characteristics. For example, a deodorant for male customers will be very different from that needed by females in the market. This will come under segmenting the market using demographic variables, etc.

the process of Market Segmentation
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What are the Requirements and Limitations of Market Segmentation or Target Marketing.

Requirements/ qualities of good segmentation as listed below-
As Market Segmentation involves grouping the customers in a market, it is essential that each segment should have certain characteristics to be called a Segment. In order to have effective segmentation of markets, following characteristics should be considered.

1) The segment should be identifiable and measureable in terms of size, purchasing power, etc. The target customers and the non-customers should be clearly defined for proper analysis. There should be data for doing meaningful analysis.

2) The segment should correlate to the organisations objectives and mission.

3) Organisational capability and resources should exist to serve the segment. A segment can be attractive but the organisation should have the resources, capabilities and capital to invest for the segment.

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