Levels of Market Segmentation
Market segmentation makes it feasible for the firm to adapt the marketing mix for specific target markets it will help the firm to better satisfy the need of customer instead of offering the same marketing mix to the different customer with different needs.
It discussed in importance of segmentation that consumers have different needs and good sellers have to satisfy them by designing a separate marketing program for each buyer. That is why market segmentation can be carried out at different levels segments, niches, local areas, individuals and mass marketing.
1. Mass Marketing
In simple words seller offer same product for all the buyers with different needs and seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers.
In mass marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers. The traditional argument for mass marketing is that it creates the largest potential market, which leads to the lowest costs, which in turn can translate into either lower prices or higher margins.
The proliferation of advertising media and distribution channels is making it difficult to practice “one size fits all” marketing. No wonder some have claimed that mass marketing is dying. Not surprisingly, many companies are retreating from mass marketing and turning to micro marketing at one of four levels.
2. Niche Marketing
A niche is a more closely defined group, it is dividing the segment in to sub segment and it can be divided by identifying the distinct trait of consumer which might need special combination of benefits this sub segments are made for those consumers whose needs and wants are not satisfied. Market segments are normally large identifiable groups within a market. A niche is a more narrowly defined group, typically a small market whose needs are not being well served. Marketers usually identify niches by dividing a segment into sub segments or by defining a group with a distinctive set of traits who may seek a special combination of benefits. For example, Johnson & Johnson consists of 170 affiliates (business units), most of which pursue niche markets. Niche marketers presumably understand their niches’ needs so well that their customers willingly pay a price premium. For example, Ferrari gets a high price for its cars because its loyal buyers feel that no other automobile comes close to offering the product-service-membership benefit bundle that Ferrari does.
An attractive niche is characterized as follows: The customers in the niche have a distinct and complete set of needs; they will pay a premium to the firm best satisfying their needs; the “nicher” has the required skills to serve the niche in a superior fashion; the nicher gains certain economies through specialization; the niche is not likely to attract other competitor or the nicher can depend on itself; and the niche has sufficient size, profit, and growth potential.
3. Local Marketing
Local marketing focus on brands and promotion to the needs and wants of local consumer and design marketing program according to the need of local consumer groups cities, neighborhoods and even specific stores.
Target marketing is increasingly taking on the character of regional and local marketing, with marketing programs being tailored to the needs and wants of local customer groups (trading areas, neighborhoods, even individual stores). Thus Citibank provides different mixes of banking services in its branches depending on the bank’s neighborhood demographics. And Kraft helps supermarket chains identify the cheese assortment and shelf positioning that will optimize cheese sales in low-income, middle-income, and high-income stores, and in different ethnic communities.
4. Individual Marketing
Individual marketing focus on satisfying the needs and wants of individual customer it’s also know as one-to-one marketing and customized marketing it’s the segmentation level where seller offer customized product to the consumer in other words a product according to the needs and preference of consumer.
The ultimate level of segmentation leads to “segments of one,” “customized marketing,” or “one-to-one marketing.” The prevalence of mass marketing has obscured the fact that for centuries consumers were served as individuals: The clothier tailor-made the suit, the cobbler designed shoes for the individual, and so on. And much business-to-business marketing today is customized, in that a manufacturer will customize the offer, logistics, and financial terms for each major account. It is the new technologies—specifically computers, databases, robotic production, and instant communication media such as e-mail and fax—that are permitting companies to consider a return to customized marketing, or what is called “mass customization.” Mass customization is the ability to prepare on a mass basis individually designed products and communications to meet each customer’s requirements.