Companies always have a wide range of audience in the market, depending on the nature of products they produce and the target. If you target a whole country, it is important to understand the market in order to serve your target audience satisfactorily, depending on their exclusive needs. A company can only understand the composition of its audience through market segmentation. This defines customers depending on what they have in common. Here, you narrow down to subsets of prospective people who are likely to purchase the product. Market segmentation is an important concept and if well done, has the ability to promote company sales. Depending on whom you sell your products to, there are various factors to consider.
For example, when targeting businesses, it is paramount to focus on the strategy. Your offer should add value to the business’ operational oversight, mission and objectives. In case you are dealing with an offer that seeks to increase capital investment, this would be under the category of influence. Thus, the top management would make the final purchase decision for such a category. Another category for business is operations. Here, your products and services target operating policies and procedures that a company undertakes. This could be an insurance plan for the employees in a company. The final decision lies with the operations management. The last category when targeting a company during market segmentation is functional. You need to focus on a specific function within the company. This could include data processing, plant maintenance, inventory control, accounting engineering design, human resources, and manufacturing among others. While these are the commonest domains for function, the decision may require high profile management in case other domains come into play.
Besides carrying out market segmentation for businesses, you could segment the market based on the needs of individual consumers. The first consideration is self-esteem. It is important to ask yourself the kind of emotional satisfaction a customer gets when they purchase your products. Understanding this is important because customers may find varying levels of emotional satisfaction in a product. For instance, rings and jewelry have emotional value to most customers even though some products like a wristwatch could play the functional role for the customer. For functional category, whatever you offer to the market, must meet specific needs of the consumer. If it is a broom, the consumer buys it with a clear conscience of its functions in his or her life.
In market segmentation, it is equally important to consider the needs of the segmentation. Ask yourself about the exact need and the person likely to experience the need. The success of any market segmentation lies between the benefits of what you are offering and the needs of the target market audience. There are several ‘need’ categories, which a company could consider. The first one is the reduction of expenses. Your target could be businesses, which are cutting down their sizes because of various reasons or persons with credit rating problems. Another need category is improved cash flow. The prospects could be businesses, which experience perennial low profits or those that have inventory costs or people who are in expensive urban areas.
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