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Title : Determine Market Segmentation to be More Effective in Advertising
link : Determine Market Segmentation to be More Effective in Advertising
Determine Market Segmentation to be More Effective in Advertising
[ad_1]Market segmentation is one of the most efficient tools for marketers to recognize and serve their target market groups. This makes it easier for marketers to personalize the campaigns they create, focus on what is needed, and group similar consumers in targeting specific audiences more cost effectively.
Looks simple, right?
Although it may seem simple, market segmentation is very important to form various marketing plans. For more details, you can see in the discussion that we have summarized as below.
What is Market Segmentation?
Market segmentation is research conducted to determine how your business divides customers or consumers into small groups based on various characteristics such as age, income, and behavior. This segment can later be used to optimize the right products and marketing strategies to each different customer.
According to Pride and Ferrel, market segmentation is a system used to divide markets into potential customer segments with similar characteristics that indicate the similarity of consumer behavior.
While market segmentation according to Philip Kotler and Gary Armstrong is the division of a market into several different groups of buyers, where each group can be targeted to market products according to the desires, characteristics, or needs of buyers in the market group.
Assumptions from several marketing experts above can be used as our reference.
In essence, market segmentation is the act of dividing target markets into more specific groups. This segmentation creates a set of market segments based on demographics, needs, priorities, and psychographic or other behavioral criteria that are used to better understand the target audience.
Why Should I Apply Market Segmentation?
- Increase Competitiveness and Expand Markets
- Increase Time and Cost Efficiency
- Improving Better Relationships and Customer Retention
- Increase Profits
- Implement the Right Targets and Business Plan
Here are some reasons why you should apply market segmentation to your business:
1. Increase Competitiveness and Expand Markets
By focusing on certain prospects, the competitiveness of your business in that market segment will naturally increase. If you focus on one particular market group and you allocate most of your time or resources to it, then your brand identity will also increase.
Focusing on certain market segments can also increase market share. For example, with a geographically based market strategy, you can start providing services in Jakarta, then wider areas and finally throughout Java and so on from time to time.
No matter how superior the product you make, without knowing who the segment is to target, your business fails!
2. Increasing Time and Cost Efficiency
Launching marketing campaigns specifically designed for different groups allows you to prioritize customer segments that are more potentially involved and converting. So by focusing your conversion efforts on certain groups, instead of distributing resources evenly across all segments, the time and cost you use will be more efficient.
3. Improving Better Relationships and Customer Retention
The market segmentation process revolves continuously to better recognize your customers, so you can better present products or services that meet their needs. Where the more you know them, the stronger your brand communication and relationship with them.
A good relationship with customers then makes it more difficult for them to turn away from you (market retention). When you use this customer segmentation to keep up with their changing circumstances, such as changing jobs, aging, developing new interests, changing purchasing patterns, etc., you can still continue to market your product to them appropriately.
By marketing products and services that appeal to customers at various stages of life, you can retain loyal customers who can turn to competitors.
4. Increase Profits
Companies that segment the market correctly tend to enjoy significant profits. According to a study conducted by Bain & Company, 81% of executives found that segmentation was very important to increase profits.
In addition, Brain & Company also found that companies with a great segmentation strategy enjoyed 10% higher profits compared to companies whose segmentation was ineffective over a period of 5 years.
5. Implement the Right Targets and Business Plans
After understanding the market segments and their characteristics, you can evaluate the marketing activities that have been done before. In this case you can find out whether the marketing strategy that you have applied is in accordance with your target or vice versa. The results can then be used as a reference for making more appropriate business and marketing plans.
What are the Types of Market Segmentation?
- Geographic Segmentation
- Demographic Segmentation
- Firmographic Segmentation
- Behavioral Segmentation
- Psychographic Segmentation
In applying market segmentation, you can refer to some of the basic implementation. Some basic or types of market segmentation are as follows:
1. Geographic Segmentation
Geographical segmentation is the most easy market segmentation. This segmentation creates different target customer groups based on geographical boundaries.
Because potential customers have different preferences, needs, and interests based on their geography, understanding the climate and geographical area of the customer group can help determine where the most appropriate place to sell products, do marketing, and expand your business.
2. Demographic Segmentation
Demographic segmentation ranks the market according to demographic elements such as age, income, education, race, gender, family size, occupation, nationality, and many more.
This segmentation is one of the simplest and most commonly used forms of segmentation because of what products and services we buy, how we use those products, and how much we are willing to spend our money on a product often based on demographic factors .
3. Firmographic Segmentation
Firmographic segmentation is similar to demographic segmentation. The difference is that demography refers more to individuals, whereas firmography refers to organizations or companies.
Firmographic segmentation will consider things like company size and number of employees. Then it will illustrate how you can handle small businesses that are different from handling corporate corporations.
4. Behavioral Segmentation
Behavior segmentation divides markets based on behavior and decision making patterns, such as purchasing, consumption, lifestyle, and usage. For example, buyers from a young age may be more likely to buy food with a unique appearance, while older consumer groups may tend to buy healthy food.
Classifying the market based on this kind of buying behavior allows you or the marketer to be able to develop a more targeted approach.
5. Psychographic Segmentation (Psychographic Segmentation)
Psychographic segmentation takes into account the psychological aspects of consumer behavior by dividing the market according to personality traits, lifestyles, income, and consumer interests.
Large markets such as those targeted by sports equipment companies generally use psychographic segmentation when classifying their customers into categories of people who care about healthy living and exercise habits.
What Examples of Market Segmentation Can Be Applied in a Business?
You need to know that market segmentation is a common practice that is applied to all industries. So it is not possible for a marketer to segment its target market using the same strategy as other marketers.
The following are some examples of market segmentation that can prove this statement:
- A marketer will only waste time and energy if they do not do market segmentation when marketing beauty products. Where although generally produced for female consumers, each product has its own target. For example, beauty products with special ingredients for acne prone skin, special products for teenagers, for women who are over 40 years old, and so on.
- A company that sells nutritious food might market its products to the elderly, while the fast food business targets demographics for young consumers or workers.
- Sports products companies often divide the market based on the sports consumers do. This can help the company concerned to market specific sports products to the right audience.
How? Surely you agree if every business in various industries has different market segmentation strategies depending on the target market, right?
How Can You Produce Market Segmentation?
- Conduct Research to Identify Target Markets
- Determine How You Want To Group Your Target Market
- Market Segmentation Study Design
- Create Your Customer Segments
- Try and Evaluate
Effective and generating market segmentation is not always applied in complicated ways. There are at least five main steps of segmentation that you can do, namely:
1. Conduct Research to Identify Target Markets
The first and most important step in segmenting is to identify the target market. Do market research to find out who you should put in the same segment.
Make sure the individual segments or target markets have in common. Women and men cannot be included in one segment because they have different needs and expectations. Likewise with young and old consumers, workers and students, and so on.
2. Determine How You Want to Group Your Target Market
The next step you must take after knowing your target market is to determine which criteria you want to use to create market segmentation. Do you want to use demographic, firmographic, psychographic, geographical or behavioral segmentation?
3. Design Your Segmentation Study
Ask a mixture of questions from several basic market segmentation, such as demographic or firmographic, psychographic, and behavioral. Make sure the questions you give are measurable.
Also, don't forget to provide terms or labels that are appropriate for each segment. This will facilitate you in making the implementation of the strategy. For example, the target market for children can have various segments, namely newborns, toddlers, pre-school children, and others.
4. Create Your Customer Segments
Design relevant strategies to promote the brand among each segment. Remember, you cannot have the same strategy for all segments. Make sure there is a relationship between your product and the target audience. For example, ads that promote women's clothing certainly can't use male models, right?
5. Try and Evaluate
Evaluate your segments by ensuring that they can be used and help segmentation you do. If not, try segmenting again based on other criteria or characteristics.
Thus a brief explanation of market segmentation can be used to determine consumer behavior.
Conclusion
Customer or market segmentation is the key to creating highly targeted marketing campaigns that will resonate the most with the specific audience group that sees them. The more relevant your marketing campaign is, the more your audience can see how your business can help them specifically.
An important part of market segmentation will certainly help you have a strong understanding of your audience. So, keep that in mind and you will soon be able to choose the segment that best helps you in designing a marketing campaign.
Are you ready to segment the market for your product or service? Approximately what kind of market segmentation can you use for your business and how will you apply it?
Don't forget to complete your students by reading the next chapter.
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