Market segmentation and definition of target segments is one of the key marketing tasks. This allows the company to focus its efforts on a strategically important business area and increase the effectiveness of marketing policies.
Market segmentation
Market segmentation is an essential element of strategic marketing. Market segmentation is the process of dividing the market into segments (or groups) of consumers according to certain criteria. Its purpose is targeted regulation and implementation of targeted marketing policy.
A homogeneous group of consumers acts as a market segment, reacting in a similar way to marketing actions (advertising, sales channels). Objects for market segmentation are not only consumer groups, but also product groups and enterprises (competitors).
Segmentation is performed according to certain criteria, which mean the characteristics by which consumers differ or are combined into a group. These can be geographical (region of residence, population), demographic (age, gender), psychographic (lifestyle, personal qualities) and socio-economic (education, income level, profession). Consumer industries (oil and gas, metallurgy, etc.), the size of enterprises, or the type of ownership of enterprises can be used as criteria for segmentation of consumers in industrial markets.
Target market
Market segmentation is performed specifically to highlight the target market. This is a homogeneous group of people, united by common characteristics. Absolutely any characteristics can act as unifying features. For example, the target audience may be men aged 30 to 35 who actively travel and play sports.
The target market can also be defined as the potential market for a firm. The main distinguishing feature of the target audience is that it is they who are more likely to purchase the company's products and have sufficient resources and capabilities for this.
A number of criteria are taken into account when determining the target market. In particular, its dimensions and potential capacity are analyzed. The latter does not imply a real consumption volume, but a potentially possible, maximum sales volume. It is important to assess the general prospects of the segment, as well as the presence of points for growth in consumption.
Another criterion is the accessibility of the segment for the targeted impact of the company, i.e. the possibility of establishing sales for this group of consumers and the cost of supplies. The state of competition in this market segment is also taken into account, preference is given to unsaturated market niches. Of course, one cannot ignore the profitability or profitability of the market segment when choosing a target audience.
