Segmentation bases in marketing are those strategies that allow companies allocate resources to ensure they get the highest payoff. Skilled statistical and market researchers usually research on segments, industries and geographies that will facilitate the payoffs. Thorough quantitative techniques are employed. They involve real customer interaction, and include focus groups and interviews. Companies seek to identify opportunities to deepen relationships with clients. Segmentation support strategies include navigating shifts in the market place and anticipating changes in needs and tastes. These strategies enable companies go for the right opportunities and get the best pay-offs. They enable companies to have a niche-market for their products. Like-minded individuals (those with similar tastes, preferences) are associated with a particular niche. Market segmentation may be based on gender, occupation, marital status, social class or age-group.
The Target Market
A target market is a group of customers separated from another because of their distinguishable aspects. Successful organizations determine their own unique operational strengths, and use them to reach potential and existing customers. Target markets may be separated geographically (location, region or climate). They may have different demographic/socioeconomic characteristics such as gender, income, occupation, education, age. Target markets may have psychographic segmentation. This means that customers within one market have similar values, lifestyles, and attitudes. Markets may also be separated from one another through product-related segmentation (similar relationship to a product), and behavioral segmentation, i.e. when there is similarity in degree of loyalty and occasional demand.
Competitive advantage enables companies to put up with rivals. Through cost leadership strategy, companies can lower costs more than their competitors. If the motive if to make more sales, they are sales-oriented. Alternatively, firms can employ differentiation strategies. This means providing products that stand out from what competitors are offering. This is done after an analysis of gaps in the market has been done. Companies may lead by innovation and thereby make the existing technologies obsolete. Through operational effective strategies, companies streamline service delivery to make it pleasurable for clients to do business with them. Company agents actively help clients making them identify with them.