Global Market Segmentation

By M. Isi Eromosele

Market segmentation aims to increase the scope of business through the close alignment of products or brands with identified customer groups. The criteria for implementing segmentation vary depending on the character of the market.

In consumer oriented marketing, a company may use demographic and socio-economic variables, personality and lifestyle variables or situational attributes (intensity, brand loyalty and attitudes) as the foundation for segmentation.

In industrial marketing, effective segmentation is achieved through the formation of end use segments, product segments, geographic segments, common buying factor segments and customer size segments.

A market can also be segmented by level of customer service, stage of production, price/performance characteristics, location of manufacturing plants, channels of distributions and financial policies.

The key is to choose variables that divide the market in a way that aspects of your strategy are aligned with how customers in segments are expected to respond to your product or service. A variable should represent an objective value, such as income, rate of consumption or frequency of purchases, not simply a qualitative viewpoint, such as the level of customer satisfaction.

A variable should create segments that would be accessible through marketing and promotions. Additionally, segments should be substantial in size, large enough to necessitate a distinct marketing effort.

The strategic choice of market segments requires careful evaluation of your company’s business strengths as compared with the competition. It also requires in-depth marketing analysis to uncover market segments where your company’s competitive strengths would be most effective.

A market should not be segmented based on such obvious categories such as religion, age, profession or family income or in the industrial sector, the size of the company. Market segmentation is a task that can be accomplished through the implementation of creative strategy.

An additional creative way of discerning market segments is by applying the concept of micro-marketing + customer relationship management. A segment is trimmed down to smaller segments and even to an individual. Micro-marketing combines two independent self-sufficient concepts: information retrieval and service delivery.

On one side is a proprietary database of information about customer preferences and purchase behaviors; on the other side is a disciplined, tightly focused approach to service delivery that uses the database information to customize services packages for individual customers or groups of customers.

An important strategic consideration in determining global marketing strategy is the definition and segmentation of the target market. The underlying factor in the formation of market segments is customer needs.

Once a market emerges, its worth should be determined by examining its profit potential. Once its potential is positively ascertained, its boundaries must be identified on the basis of product/market scope.

Market boundaries are defined by grouping a set of market cells together, each defined in terms of the above dimensions. While it is conceivable to serve an entire market, served markets are usually smaller in size and scope than the total market.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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