Market segmentation

How can a product be made more attractive for a particular market sector?  A study of what customers in particular sectors of the market need can lead to a change in the product design, specification or formulation to better suit a particular type of customer.  

e.g a generator needs to be mobile for building sites, needs to be operational underwater (submersible) for marine applications, needs to be fire and explosion proof for mining applications or could be adapted further for other applications.  A thorough understanding, through marketing research, of customer needs will reveal what customers in different sectors really want. 

Types of Market Segmentation

At research level there are four different types of market segmentation:

1.A Priori – this type of market segmentation is based on known variables such as age, gender or income. This is the simplest and easiest way to create market segments. 

2.Usage Segmentation (also known as decile analysis or pareto analysis) – this type of market segmentation is usually used in business to business markets and  based on dividing a group into 10 equal parts or top 80% and bottom 20% of usage frequency.

3.Attitudinal/Cluster Analysis – this market segmentation is based on dividing segments into psychological profiles to determine their usage of a product or service. In such an instance, preference data is most accurate to determine clusters.

4.Needs Based Segmentation - this type of market segmentation is derived from determining a consumers needs and developing a product or service around this as opposed to pushing an already existing product or service onto a specific group.

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Read More: Benefits of Market Segmentation