Definition of Market Segmentation

For a business is not easy to satisfy everyone. The number of consumers which are so many, scattered and diverse demands made ​​the company should be selective in offering products or services to groups of consumers that if can satisfy their needs. That requires market segmentation.

Market segmentation is the process of division of the overall market into market groups consisting of people who have a relatively similar product needs. Its purpose is to design a marketing mix (or more) that accurately fit the needs of the individuals in the segment (or segments) of the selected markets. Another notion is the process of dividing the whole product and service market that is heterogeneous in several segments, where each segment tends to be homogeneous in all its aspects.

To build a segmentation strategy, the first step is to determine the segmentation approach which is appropriate with the market segment. Generally there are two main approaches namely a-priori approach and post hoc approach.

A-priori approach is the approach taken before a study was conducted, where researchers have made market based on characteristics such as the geographic, demographic, psychological, psychographic (life style), sociocultural, use related segmentation, use-situation segmentation, benefits, hybrid segmentation.

Post-hoc approach is an approach that does not made market before the data were collected and analyzed. Segments created after the data were collected and analyzed in accordance with these attributes are considered important by researchers. So post-hoc approach is research-oriented approach and developed for specific products at a given time range. Thus power marketers rely heavily on knowledge of product and their business. This knowledge will guide marketers to determine the proper attributes are used as the basis for segmentation analysis performed. This knowledge determines the sensitivity of marketers in watching the market.

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