Segmentation - The Vibons Blog


By Team Vibons   |    3 min read


By Team Vibons
 3 min read

"Any customer can have a car painted any color that he wants so long as it is black," said Henry Ford, the father of mass production, when he began selling his T-Model car. That is all water under the bridge now. Why are cars being put into the market in a myriad of types, colors, and models today? Why is water sold in various forms?

Think along the same lines. Can two customers have the same expectation from us?

Do we really know which one of our customers creates the main revenue for us, and which one consumes most of our time?

In today's competitive economic era, customer demand is rising, while loyalty is waning. The right approach is critical at a time when profit margins are being squeezed and competition on the market is changing rapidly. We have to balance out rising and changing customer demands with limited resources that do not increase at the same rate. In other words, we need to develop segmentation models so as to improve profitability by value creating strategies.

Briefly, "segmentation," or "departmentalization," is described as dividing the market into subsets of consumers with similar characteristics. In this way, the organization can target the most appealing of these segments, and develop marketing mixes based on their needs.

Segmentation is based on demographic, geographic, or social factors. For instance; in the camera market, families with newborn babies and frequent travelers each make up a segment. The company focuses marketing activities on clinics for the first segment and on travel websites for the latter.

Segmentation involves two key practices:

Targeting consists of an evaluation of the market potential of the segment and designation of good ones as the target market.
Meanwhile, positioning means gaining a more prominent, different, and appealing place in the consumer market to get an edge over the competition.

Since the days of Henry Ford are long gone, success is a mere dream without these practices.

The ideal segmentation process moves along as follows... Total market analysis and segmentation... Segment assessment... Target market selection and analysis... Insight... Positioning... Marketing mix... Finally, implementation and evaluation...

In summary, the market is departmentalized based on its similar characteristic... Targeting... and positioning is done... The marketing mix is developed.

Segmentation unearths customer insights and allows effective use of marketing budgets. It is the first stage in business development in many industries. Toyota has created various brands based on income class segmentation. The same goes for cough syrups or tablets...

Segmentation/targeting seeks to answer four questions:

1. Who are the customers?
2. Where do they stand? – In terms of their interest or preferences toward the product...
3. How can I increase the number of customers and their loyalty?
4. What are the messages and channels I need to employ so as to develop a connection with my customers?

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