What is Market Segmentation, Benefits, Types, and Examples

In business activities, market segmentation is a marketing strategy that is commonly used. Market segmentation is important for business people to learn so that the business they run can benefit.

Without clear market segmentation, business people will find it difficult to meet their target consumers and achieve large profits. Market segmentation can also be used as the most basic data to understand the needs of target customers.

What is Market Segmentation?

Market segmentation is a marketing term that refers to grouping potential buyers into segments with similar needs or similar responses to marketing actions.

Market segmentation allows a company or a brand to get a better understanding of its target audience. In other words, market segmentation is a strategy for mapping target consumers based on characteristics, needs, or behavior so that companies are able to better identify these consumer groups.

With market segmentation, companies can find out which target consumers are right for their business. So that the business is expected to provide optimal results and have high marketing effectiveness.

Benefits of Market Segmentation

Market segmentation has considerable benefits for a business, such as helping companies create marketing, advertising, and sales strategies. Following are some of the benefits of determining market segmentation that can be felt by business people:

• Create clear and specific marketing messages
• Develop an effective marketing strategy
• Attract potential customers
• Increase profits
• Increase consumer loyalty
• Making the business different from competitors
• Identify the right niche market
• Develop products or services from businesses that are owned

Types of Market Segmentation

There are four types of market segmentation that are most commonly used by companies, namely demographic, geographic, behavioral, and psychographic segmentation. Here's the full explanation:

1. Demographic Segmentation

Demographic segmentation is segmenting the target market with their demographics. Demographics here include things like age, gender, income, occupation, education, race, to religion.

2. Geographic Segmentation

Meanwhile, geographic segmentation is segmentation based on geographic variables. These variables include altitude, temperature, weather, climate, population, to culture. This type of segmentation can be considered, because the needs and uses of a product or service will vary depending on the weather, soil conditions, and location.

3. Behavioral Segmentation

This segmentation can help companies find out how consumers behave towards a business. Some of the variables seen in behavioral segmentation are knowledge, attitudes, reactions, and product usage by a consumer.

Behavioral segmentation is often associated with the decision making process (decision making). If implemented properly, companies can develop strategies to build brand loyalty from consumers.

4. Psychographic Segmentation

Unlike the other three types of market segmentation, psychographic segmentation involves the psychological aspects of potential customers. Usually this segmentation adjustment process is a little more complicated because the company must know exactly about the tastes of the target market.

To implement a psychographic segmentation strategy, companies can conduct surveys of certain consumer groups. This segmentation allows companies to find out the preferences of the target market for their brands and products, for example lifestyle, interests, to customer characteristics.

Example of Market Segmentation

After knowing the benefits and types of market segmentation, let's look at the following examples of market segmentation to understand it clearly:

1. Example of market segmentation for beauty products

Beauty products have a demographic segmentation of women aged 13-21 years. Meanwhile, its geographic segmentation is targeted at consumers in urban areas throughout Indonesia. Then, the psychographic segmentation is targeted at the interest in taking care of yourself so that you always look beautiful and attractive.

2. Examples of Shoe Product Market Segmentation

A shoe brand has a demographic segmentation of teenagers who have needs for appearance, geographic segmentation of teenagers in various locations (cities or regions), and psychographic segmentation is placing shoe products as part of a lifestyle or fashion to make it look more up-to-date.

3. Example of Dairy Product Market Segmentation

Dairy brands have geographic segmentation in urban areas throughout Indonesia. Then, the demographic segmentation is targeted at men and women of productive age, namely 19-45 years. Meanwhile, the psychographic segmentation is assigned to people with relatively high or productive activity patterns that require special supplements to maintain health and endurance.

That's information about the types and examples of market segmentation in the business world. It can be concluded, market segmentation is the act of dividing the market into well-identified parts. The purpose of market segmentation is to help companies reach appropriate and appropriate target consumers.