Market segmentation is the division of an overall market into market segments and the processing of one or more of these market segments. The market segmentation consists on the one hand of the market acquisition and the process of market division and on the other hand of the market cultivation d. H. the selection of segments and their processing using suitable marketing instruments .
Market segments can be formed according to both products and customers. The segments can be based on different aspects such. B. age, income, gender, social status, occupation are formed (customer segmentation). In accounting , segmentation can be mapped by subdividing it into product groups (product segmentation ).
The market segments are to be formed so as similar as possible reactions to the marketing tools and practices of the company have, thus allowing a differentiated market.
The formation of buyer groups according to socio-demographic characteristics or leisure interests was already suggested by Horst Kliemann (1896–1965).
Classification and demarcation
In business administration, markets are often segmented according to customer types , while in economics, criteria such as the so-called substitution gap or the concept of the relevant market play a role.
- Target groups
- play a role especially in market cultivation. The aim here is to address different customer groups (target groups) within a market segment with suitable communication instruments and the corresponding distribution channels (targeting).
- Strategic business areas
- are more closely linked to the market segments. The difference here lies in the level of aggregation . While relatively rough criteria are used to delimit business areas, the market segmentation is more detailed. In the case of companies that are strongly customer-oriented, business fields and market segments can greatly overlap.
- are to be strictly separated as segments on the supply side from the market segments that are always to be understood on the demand side.
Market segmentation is situational. The specific tasks of the companies in marketing and sales determine the perspective of the segmentation. Last but not least, the available data also determines the segmentation approach. In many cases, different segmentations are lived side by side in the same company. The challenge is to coordinate the individual approaches from different parts of the company.
Position within marketing
The market segmentation has a central position within marketing and is one of the most discussed concepts in economics . It is seen as the "key to market success" because it is the key to making the basic idea of marketing - consistent alignment with customer requirements - possible.
Degree of segmentation
The degree of segmentation used is differentiated between:
- Zero segmentation (S = 0%)
- No distinction is made here within the number of potential buyers ( mass market strategy ). A company that pursues such a strategy sees no product-related sense in a market division, and aims at an undifferentiated occupation of mass markets.
- Segment formation in the narrower sense (S> 0% and <100%)
- A market segment consists of a larger, identifiable customer group within a market and can be defined using relevant segmentation criteria such as age, income, social status, etc. This enables targeted processing of the segment using marketing instruments.
- Formation of niches (S> 0% and <100%)
- This can be understood as a finer sub-segmentation of market segments. This makes sense if there are major differences between customer needs - even within a segment - or in the case of locally limited offers. An exact demarcation between segment and niche based on size is hardly possible.
- Atomized segmentation (S = 100%)
- In principle, this regards each individual customer as a separate segment (segment of one) . Examples of this are the custom-made clothing or the production of unique items , where the customer can influence the design of the product. The principle of mass customization combines the mass production of zero segmentation with the approach of atomized segmentation (e.g. adaptation of the mass product of Dell computers to individual requirements).
Possible segmentation criteria can be divided into categories, which are also used in combination for market division. Sensible and applicable segmentation criteria should meet the following requirements:
- They must be relevant to purchasing behavior, i. H. Break down current and future consumer behavior as securely as possible into segments.
- They should be measurable and verifiable by means of proven market research methods.
- You must guarantee a temporal stability of the information related to the segment at least for one planning method.
- The cost-effectiveness of the segmentation effort and the analysis required for it must be acceptable within the framework of costs and benefits.
Necessary properties for the segments formed:
- They should be easy to identify based on the selected variables.
- They have to be relevant to the market, the segments have to be able to represent a substantial part of the market.
- Stability (see variable criteria)
- You should be accessible, the segments should be able to be addressed on marketing measures (targeting).
- You should be approachable, the segments should react uniformly to marketing measures.
- An identification of the segments is intended to provide guidance for decisions regarding an effective specification of marketing instruments.
Demography starts with external and therefore easily ascertainable characteristics. There are three subgroups of demographic market segmentation criteria:
- Socio-geographical z. B. the division into Nielsen areas or ACORN
- Socio-economic z. B. Profession, income, household size, education, ...
- Socio-demographic z. B. Age, gender, height, weight, family status, number of children in the household, nationality, religious affiliation, ...
- Macro-geographic: states, federal states, regions, counties, cities, municipalities. A distinction is also made between rural and urban populations or according to different local sizes.
- Micro-geographically as a continuation of the geographical segmentation denotes living spaces that are shared by people with the same values, the same lifestyle or social status. This is also known as neighborhood affinity.
refers to general personality traits of current and potential buyers as well as product-specific characteristics.
- Personality traits e.g. B. Life Style AIO , typologies such as yuppies , double income no kids (DINKs) or skippies , concepts such as VALS or Sinus-Milieus .
- Product-specific segmented according to criteria relevant to sales, e.g. B. the properties of the product ( basic benefit, additional benefit), goods classes , type of consumption or consumption, forms of need , technological use.
- Scene marketing : Scenes are associations of people with the same values, meeting places, clothing styles and even linguistic uses and character codes as well as similar consumer behavior. Companies often do scene marketing for new trend sports.
Behavioral / observable buying behavior
includes criteria of information , buying and usage behavior (behavior-related segmentation criteria) as well as brand loyalty. This type of segmentation is also known as benefit segmentation (Becker).
- the price behavior (price range, use of special offers),
- the media usage (type and number of media, use intensity)
- the payment history (payment behavior, compliance with the terms of payment )
- the choice of shops ( types of business , loyalty to shops) and
- the choice of product ( choice of brand , purchase volume, consumption intensity ).
Hybrid segmentation approaches
combine several segmentation variables to achieve a more efficient classification.
- "Demographic-psychographic profiles" are often used to describe the recipient group of a medium ( sinus milieus )
- “Geodemographic segmentation” is based on the fact that residents of a certain district often have the same financial means, preferences, lifestyles and consumption habits. This helps for direct marketing and planning for retail branches
Segmentation by profitability
Customers with the same profitability often share the same expectations. The different levels of the customer pyramid are treated differently so that corresponding expectations are met and the company directs its resources to the right areas of application. The basic strategies are to let customers of the middle levels rise and to get rid of the unprofitable customers of the lowest level. The concept is used in service companies (hotels, banks, insurance companies, etc.)
The demographic and psychographic approaches to market segmentation can only show correlations between characteristics and results. Customer groups with the same demographic characteristics can show very different consumer behavior. Only when marketing theory shows causalities and develops behavior-related segmentation criteria can marketing management recognize which properties, functions and which positioning induce customers to buy a product. "Companies that tailor their products to the circumstances in which customers use the products rather than the customers themselves are also the ones who successfully bring new products to market" (Christensen / Raynor).
The division of the overall market into internally homogeneous and mutually heterogeneous subgroups (market segments) with regard to their market reaction represents a market division of the consumers, whereby the population is initially unknown. It is helpful to first differentiate between non-buyers and potential or current buyers, whereby the segmentation relates in particular to the latter groups. The requirements for the possible segmentation criteria can be described as follows.
- Purchasing behavior relevance: The segmentation criteria must show a relevant relationship to the purchasing behavior of consumers.
- Suitability for the use of sales policy instruments: The characteristics of the segmentation criteria should offer starting points for the targeted use of sales policy instruments (so-called marketing mix-related reaction coefficients ).
- Accessibility: The selected segmentation criteria should enable a targeted communication and distribution policy for the selected segments. For example, the selected segmentation criteria should be able to determine target groups with the same media usage behavior.
- Measurability (operationality): The selected segmentation criteria should allow a delimitation with existing market research methods. Easily accessible and therefore often used are demographic criteria such as income, age, gender, etc.
- Temporal stability: The segmentation criteria should have a certain temporal stability so that a longer-term use of the sales policy instruments is possible.
- Profitability : Ultimately, the criteria should help to delimit segments that are worth processing.
The criteria must be collected in such a way that the benefits resulting from the segmentation are greater than the costs incurred.
Market segmentation for capital goods
Compared to consumer goods marketing (consumer marketing), capital goods marketing (industrial marketing) is subject to different framework conditions: The demand is often a derived demand; the demand for electricity determines the demand for a power plant, etc. - In addition, the purchasing behavior, shaped by buying centers , is often multi-staffed and formalized.
Segmentation criteria are e.g. B .:
- Company size
- Geographical location (country)
- New customers or possible interested parties / existing customers
Compared to consumer goods marketing, significantly more information for market segmentation from secondary sources is available about potential customers in capital goods marketing, such as: B.
- Exhibition catalogs
- Credit agencies such as B. Creditreform or Intrum Justitia
Goals of market segmentation
- Market identification
- Definition of the relevant overall market
- Determination of the relevant sub-markets
- Finding neglected sub-markets (market niches, market niches)
- Better satisfaction of consumer needs
- Achieving competitive advantages
- Avoidance of substitution effects between the markets in your own range
- Timely assessment of new products introduced by the competition and timely taking of countermeasures
- Assessment of one's own brand positioning in comparison to the positioning of competing products
- Correct positioning of new products
- Specification of the target groups of established brands (possibly repositioning)
- Well-founded forecast of (segment-specific) market development
- More precise derivation of market reaction functions
- Targeted use of marketing instruments
- Optimal allocation of the marketing budget to individual segments
- Increase in the degree of target achievement (e.g. increase in profit or sales)
Statistical segmentation methods
Statistical market segmentation uses statistical data mining methods to divide the overall market into internally homogeneous and mutually heterogeneous market segments . The combination of factor and cluster analysis has proven particularly useful here.
- Heribert Meffert. Marketing. Basics of market-oriented corporate management. Concepts - instruments - practical examples. With a new case study VW Golf , 8th edition, Gabler, Wiesbaden, 2000, p. 181
- Peter Runia, Frank Wahl, Olaf Geyer, Christian Thewißen: Marketing, Oldenbourg Wissenschaftsverlag GmbH, Munich, 2005, p. 85
- To: Klaus Brockhoff: Business Administration in Science and History: A sketch , Gabler, 2nd edition, 2006, page 165, ISBN 3-8349-2576-4
- Peter Runia, Frank Wahl, Olaf Geyer, Christian Thewißen: Marketing, Oldenbourg Wissenschaftsverlag GmbH, Munich, 2005, pp. 85–86
- Described by Art Weinstein as "Key to market success". In: Art Weinstein: Market Segmentation. Using Demographics, Psychographics and Other Niche Marketing Techniques to Predict and Model Consumer Behavior, Irwin Professional Publishing, 1994, p. 2
- Martin Benkenstein: Decision-oriented Marketing. An introduction, Gabler, 2001, p. 51
- Philip Kotler, F. Bliemel: Marketing Management, Schäffer-Poeschel Verlag, 10th edition, Stuttgart, 2001, p. 418
- Hermann Freter: market segmentation. Customer-oriented market survey and processing, Kohlhammer, 2nd edition, Stuttgart, 2008, p. 43
- Klaus Backhaus: Investment goods marketing, Vahlen Franz GmbH, 4th edition, 1995, p. 158 ff.
- Heribert Meffert: Marketing: Basics of market-oriented corporate management: concepts, instruments, practical examples; with a new case study VW Golf Wiesbaden Gabler 2000, ISBN 978-3409690171
- Jochen Becker: Marketing concept. Basics of strategic and operational marketing management. 9th updated and supplemented edition. Vahlen, Munich 2009, ISBN 978-3-8006-3694-5 .
- Clayton M. Christensen, Michael E. Raynor: The Innovator's Solution. Creating and sustaining successful growth. Harvard Business School Press, Boston MA 2003, ISBN 1-578-51852-0 .
- Hermann Freter: Market and customer segmentation. Customer-oriented market acquisition and processing. 2nd completely revised and expanded edition. Kohlhammer, Stuttgart 2008, ISBN 978-3-17-018319-3 .
- Inga Höhne: Use of radio in the context of lifestyles. An empirical study on media usage behavior using the example of the Berlin metropolitan area (= Socialia 96 series). Dr. Kovač Verlag, Hamburg 2008, ISBN 978-3-8300-3992-1 (also: Düsseldorf, Univ., Diss., 2008).