Question 3 (a)
Market segmentation, how it differs from targeting, and requirements of effective segmentation
9 marks
- Time to write
- About 18 minutes
Question
Question 3 (a) · 9 marksWhat is your understanding of Market Segmentation? In what way is it different from Market Targeting? Elaborate the different requirements that make market segmentation effective.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- What…?Elaborate…3 asks, each with its own marks below. Answer all 3.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Meaning of market segmentation 2 marks 2 min
- 2 Difference from market targeting 3 marks 6 min
- 3 Requirements of effective segmentation 4 marks 8 min
- Check: every ask answered, key terms underlined 1 min
Easy marks
- Meaning of market segmentation (step 1, 2 marks): a clear definition and a line on what it covers. It opens the answer, so it takes a minute or two.
Short on time? Keep step 1 short. Trim steps 2 and 3 evenly rather than skip one: each is capped at its own marks.
Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Meaning of market segmentation
Market segmentation means splitting a broad, varied market into smaller groups of buyers who want different things or buy in different ways, so that each group can be given its own product or programme. Within a segment buyers are alike enough that one offer suits them all. Markets are segmented on geographic, demographic, psychographic and behavioural bases. Example: a shoe company may divide its market into school children, sports enthusiasts, office-goers and fashion-conscious young adults.
1On the table the buyers sort themselves: students, families, office-goers, riders.
Market segmentationDividing the market into groups
2Her hand hovers, then picks the groups her scooters fit best.
Market targetingChoosing one or more groups to serve
3And on the street, those are exactly the hands on the handlebars.
Segmentation divides the marketTargeting selects from it
Segmentation is the first step of the STP process, segmentation, targeting and positioning, through which a firm designs a customer-driven marketing strategy.
Segmentation and targeting compared
| Basis | Market segmentation | Market targeting |
|---|---|---|
| Meaning | Dividing the market into groups of similar buyers | Evaluating each segment's attractiveness and selecting one or more to enter |
| Step in STP | First step | Second step, after segmentation |
| Nature | Analytical: describes the market | A decision: commits resources to chosen segments |
| Criteria | Bases such as age, income, lifestyle, benefits sought | Segment size and growth, structural attractiveness, the firm's objectives and resources |
| Outcome | Segment profiles | A target market and a targeting strategy (undifferentiated, differentiated, concentrated, micro) |
Example: the shoe company identifies four segments (segmentation) and decides to serve only sports enthusiasts and office-goers (targeting). It then positions its sports shoes on performance and its office shoes on comfort and style (positioning).
Requirements of effective segmentation
Not every way of dividing a market is useful. Segments must be:
- Substantial. Big enough, or spending enough, to repay a programme of its own. A shoe range made only for left-handed tennis players over sixty would not cover its design costs.
- Differentiable. It must respond to marketing differently from other segments. If office-goers and students reacted in exactly the same way to every shoe offer, splitting them would gain nothing.
- Measurable. Its size, buying power and profile must be estimable. Age or income groups are easy to count; a group of people who feel young at heart is not.
- Accessible. The firm must be able to reach it through media and channels it can use. Buyers spread across remote villages with no stockist nearby are hard to serve.
- Actionable. The firm must have the resources to build a programme that wins it. A small regional shoemaker may see five attractive segments but have the factory capacity and sales staff for only one or two.
- Stable. Its features must last long enough to justify the effort.
Segmentation describes the market and targeting chooses from it. Segmentation is useful only when the segments are worth serving, distinct, measurable, reachable and within the firm's ability to serve.
Where the 9 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Meaning of market segmentation | 2 |
| 2 | Difference from market targeting | 3 |
| 3 | Requirements of effective segmentation | 4 |
| Total | 9 |
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