Market segmentation | Solutional Webdesign Antwerpen

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Market segmentation is a strategic process in marketing, used to divide a broad consumer^[3] or business market into subsets of consumers, known as segments. These segments have common needs, interests, or priorities and can thus be grouped together. This process enables companies to identify and further define high-yield segments, adapt marketing programs for different segments, and ultimately achieve competitive advantage^[1] through tailored offerings. Its effectiveness lies in the assumption that each segment is unique and requires a bespoke marketing mix^[2]. Market segmentation has a rich history, evolving from basic demographic techniques to more comprehensive and nuanced strategies, such as hyper-segmentation. A critical aspect of this strategy is the S-T-P approach, which stands for Segmentation, Targeting, and Positioning. This approach simplifies the segmentation process, guiding marketers in identifying potential markets, focusing on their unique needs, and positioning their product or service offerings accordingly.

Terms definitions

1. ↑ competitive advantage. Competitive Advantage is a key business concept that refers to the unique ability of a company to outperform its industry rivals. It is achieved through various strategies identified by Michael Porter, a foremost authority in strategic management. These include cost leadership, differentiation, and focus. Cost leadership involves the production of goods or services at a lower cost, granting higher profit margins. Differentiation, on the other hand, entails offering unique products or services that stand out in the market. Lastly, the focus strategy targets specific market segments to optimize resource utilization. Factors internal to a company, such as positioning, corporate identity, and core competencies, also contribute to competitive advantage. However, advantages can sometimes be classified as unfair if they grant benefits to a business that are not accessible to others, hence disrupting market fairness. Government bodies often intervene in such cases to maintain fair market dynamics. Furthermore, the resource-based view of a firm and its capacity for innovation are other key determinants of competitive advantage.

2. ↑ marketing mix. The marketing mix is a strategic tool used by companies to effectively market and sell their products and services. Developed in the late 1940s and popularized in the 1960s, it includes the four original elements, or '4 Ps': Product, Price, Place, and Promotion. Products are the goods or services offered by the company, while price is the amount customers are expected to pay. Place relates to how the product is distributed and accessed by customers, and promotion involves communicating the value of the product to potential customers. The marketing mix has evolved to include three additional components for services: people, process, and physical evidence, known as the extended mix. This strategy is crucial for a company's success as it helps leverage strengths, mitigate weaknesses, and enhance competitiveness. It also aids in achieving marketing objectives through internal collaboration and alignment. The marketing mix is adaptable and can be optimized for various industries and digital marketing efforts.

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Market segmentation (Wikipedia)

In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on shared characteristics.

In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles, or even similar demographic profiles. The overall aim of segmentation is to identify high yield segments – that is, those segments that are likely to be the most profitable or that have growth potential – so that these can be selected for special attention (i.e. become target markets). Many different ways to segment a market have been identified. Business-to-business (B2B) sellers might segment the market into different types of businesses or countries, while business-to-consumer (B2C) sellers might segment the market into demographic segments, such as lifestyle, behavior, or socioeconomic status.

Market segmentation assumes that different market segments require different marketing programs – that is, different offers, prices, promotions, distribution, or some combination of marketing variables. Market segmentation is not only designed to identify the most profitable segments, but also to develop profiles of key segments to better understand their needs and purchase motivations. Insights from segmentation analysis are subsequently used to support marketing strategy development and planning. Many marketers use the S-T-P approach; Segmentation → Targeting → Positioning to provide the framework for marketing planning objectives. That is, a market is segmented, one or more segments are selected for targeting, and products or services are positioned in a way that resonates with the selected target market or markets.

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