Market Segmentation
Study

Market segmentation is used as a strategic marketing tool for defining markets and help in allocating resources. Segmentation studies use statistical techniques such as factor analysis and cluster analysis to combine attitudinal and demographic data to develop segments that are easier to target. In many situations, it is better to identify your target groups and aggressively market to smaller, more defined segments.

Market segmentation is concerned with individual or group differences in response to specific market variables (e.g. preferences, lifestyles, media habits, etc.). The strategic presumption is that if these response differences exist, can be identified, and are reasonably stable over time, and if the segments can be efficiently reached, the company may increase its market share beyond that obtained by assuming market homogeneity.

Methodology of segmentation study:

o Conduct qualitative research to gain a general understanding of purchase and usage behavior.
o Conduct quantitative research to determine purchase and usage patterns by segment.
o Conduct cluster analysis to segment the market.

Benefits of segmentation studies:

o Focused marketing approach of the company
o Increase in competitiveness
o Market expansion
o Customer retention
o Have better communication
o Increases profitability

This helps you answer the following queries :

o What is the purchase process for the product market, by user segment?
o How do users work with these products, by user segment?
o What can be done to increase the likelihood of purchase, by market segment?
o Specific product features/attributes
o Pricing
o New distribution channels
o How can usage be increased within segments?
o What are the types of things they would like to be able to do with these products?
o What is the likelihood of the purchase of our product and competitive products by non-customers, by market segment?
o How are competitors’ customers using competitive products, by user segment?