Simply Grasp

How to implement market segmentation?

To get a bigger slice from the market pie

Happy day, amazing people!!!

Before we jump into the concepts let’s look into the following tables for a better understanding of the forthcoming example. We have implemented market segmentation for our example by selecting the appropriate ones from each of these tables.

Levels of Market Segmentation

For instance, we want to open a bakery shop “Jolly Bakes” in a town called “Southern” where there are only few shops that exist to cater the needs of the town.

So, the first thing we have to do is to choose the level of market segmentation. From the above given scenario, it would be feasible for us to choose ‘Local marketing’ rather than ‘Niche or Individual marketing’.

If we are planning to open a bakery shop with only products that are made from ‘Plant-based’ and ‘non-diary’ materials then choosing Niche marketing would be a wise option and also, we should have enough consumers for those vegan products for the business to sustain.

Choosing Individual marketing would also not be a wise option because we could customize designs (E.g., mickey mouse birthday cake) but not products (E.g., Customer wanting an ice cream cake) for the small town.

And also, segment marketing suits well with services rather than tangible products (E.g., Disney hotstar categories – Free, VIP, Premium)
So, in our situation, it would be appropriate to choose local marketing.

Patterns of Market Segmentation

For the patterns of market segmentation, first step is to identify the preference of the market. Here in this case the market is a town called “Southern”. We need to find whether people of Southern like bakery products, if yes then which items they prefer and so. For this purpose, market segmentation research procedure must be carried out in 3 stages.

Let’s say from the research it was found that the town has a clustered preference. Some people like cookies, some like cupcakes, some like pastries but many like cakes. Each of these clusters could be a potential product segment.

So, a bakery shop predominantly concentrating on making cakes followed by cookies and cupcakes would be suitable one to carter the town’s clustered preference.

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Segmenting Consumer Markets

Next step is to segment this consumer market to target our right audience in a better way. For which we will be choosing Demographic and Behavioral segmentation to know their age groups and buying patterns of the town. Since we are using more than one attributes, it can also be called as multi-attribute segmentation.

We will not be choosing Geographic segmentation because our bakery shop is currently going to be opened in one location only and also Psychographic segmentation because it has a very little role to play in bakery business.

To check whether the market segmentation is effective, following steps has to be taken care,

Selecting and Entering Market Segments

For entering market segments, we should choose selective specialization because we are going to serve cakes followed by cookies and cupcakes. Since it is a confectionary business, we can observe some synergy among the product segments based on the materials used (flour, sugar, eggs). Other businesses may or may not have synergy among their segments. (E.g., Procter and Gamble: Oral care products and Hair care products)

Back to our entry strategy, we also can’t choose any other strategies because we are not going to specialize in a single product say cakes alone (product specialization) or serve the market with all bakery items (market specialization).

We hope you guys have understood the market segmentation concepts with this example. Try thinking of an example and analyze them as above. There is no hard and fast rule. Different industries segment their market differently based on their size, demographics, psychographics, behavior and so.

Ok before signing off

Love what you do, do what you love…. Bye

From,

Simply grasp