Segmentation: Importance and Approaches in Service Sector Marketing

This essay provides a detailed analysis of market segmentation within the service sector, emphasizing its crucial role in the STP (segmentation, targeting, and positioning) framework. It defines market segmentation as the process of dividing a broad consumer or business market into sub-groups of consumers based on shared characteristics. The essay discusses the importance of segmentation in identifying the right customers, improving campaign performance, and supporting product development. It highlights various segmentation approaches, including demographic, behavioral, geographic, and psychographic segmentation, providing examples of companies like Coca-Cola, Nike, McDonald's, and Apple that effectively utilize these strategies. The conclusion reiterates that market segmentation is a vital marketing approach that helps companies attract the right customers, increase brand loyalty, and drive business growth, making it essential for maintaining a competitive position in the industry. Desklib provides access to similar solved assignments for students.

MARKETING AND
BUSINESS FOR
SERVICE SECTOR

Table of Contents
INTRODUCTION....................................................................................................................3
MAIN BODY............................................................................................................................3
CONCLUSION.........................................................................................................................5
REFERENCES.........................................................................................................................7

Topic- Describe segmentation and its importance. Discuss how marketers segment the
market and identify the variables (bases) used in the most common segmentation approaches.
INTRODUCTION
Segmentation is one of the crucial marketing stay which is a part of STP framework.
This framework is used by companies to segment the target market, plan innovative
strategies, and position their products and service sin effective manner through which
companies can meet their objectives and gain competitive advantage. Market segment is a
category of customers who are put into groups according to their likes and similarities in an
otherwise homogeneous market (Market Segment, 2021). This essay will discuss about the
concepts of segmentation and its importance. The essay will define how marketers segment
market and which variables acts as basis for classifying the marketplace.
MAIN BODY
According to Schiffman and Kanuk, “market segmentation is the term which defines
the process of dividing market into various subsections of consumers which have common
characteristic”. Market segmentation is the approach of STP (segmentation, targeting and
positioning) marketing technique which assist the companies in classifying the market into
different groups through which an organization can divide the target market into sub groups
that can be helpful in meeting the organizational objectives. Segmentation is the marketing
strategy which is helpful for brands and improving their campaign performance by which
second target right people with the right message at right time. This also supports and product
development that can assist an organization in meeting the needs of customers. With the help
of this marketing strategy, company can expand their business in international marketplace
(What Is Market Segmentation, 2019). For example, whole food chain which is currently
operating under Amazon is a grocery store which is following segmentation strategy and
classifying their target market on the basis of high income, health or eco conscious customers
and educated city dwellers.
Market segmentation is also helpful in identifying the right market which will also
allow company to precisely target audience with innovative strategies. By segmenting the
target market, this will support companies in understanding the type of customers which the
company wants to target through it leads and conversions can be generated at higher rate with
effective targeting and positioning strategies. Segmenting plays a crucial role in marketing as
this is the foundation stone of targeting and positioning strategies which will assist company

in maintaining the competitive position within the industry. Market segmentation is essential
as this helps in identifying the right customer which needs to be targeted by the company by
creating segments on the basis of various factors which can divide the market players will
stop due to market segmentation this helps in evaluating the size of consumer can measure
sales potential of company. It is also essential create accessibility to the target market which
can be driven by market segmentation as this will support the company in reaching and
serving a greater number of specific customers as per the suitable segmented marketplace for
the company which will also be helpful in bringing stability and business growth. With the
help of market segmentation, this bring opportunity for understanding the nature of market
through which maximum number of customers can be attracted. This also offers better
position to spot marketing opportunities and is the base for creating a marketing budget that
depends on region or locality.
Segmentation strategy is helpful for marketers as this helps business in making
effective use of money, time and resources which will allow companies to gain better
understanding about their consumers and their demands (THE IMPORTANCE OF MARKET
SEGMENTATION, 2021). Market segment is one of the essential functions which is
performed by companies and by using segmentation to classify the marketplace, support
company in boosting their return on investment (ROI). This also offers competitive edge
through an organization can provide better customer service in market. This marketing
strategy is helpful in building brand loyalty and in understanding who are the loyal customers
of the organization.
Market segmentation is the practice of dividing target market into approachable
groups where subsets of market are created. The subsets of market are created on the basis of
demographic factors companies, priorities, common interest, behavioural factors and
physiographic factors. Marketers can follow various strategies which can support them in
segmenting market into various groups. Some of the types of market segmentation are-
demographic segmentation, behavioural segmentation, geographic and psychographic
segmentation.
Demographic segmentation is the market segmentation approach which sub
classifieds the market our audience on the basis of people-based differences. These
differences can be related to family size, occupation, income, sex, age, ethnicity, marital
status, education level, race, nationality and religion (Bian, Song and Bai, 2019). For

example, Coco-Cola and Pepsi are the companies which are advertising globally and at the
same time both companies localize their campaigns for each country as well. The companies
focus on local customs. Religions and nationality through which they can attract customers
from each ethnicity and race.
Another type of market segmentation approaches behavioural segmentation which
allow companies to segment the target market on the basis of consumer purchasing habits
through online and offline mediums, actions taken on website, loyalty programs usage rate
(Dolnicar, 2019). Behavioural data is valuable has this directly help consumers to interact
with companies. For example, Nike follows behavioural segmentation which allows company
to gain benefits and offer advantage to customers through their clothing, comfortable,
footwear and essential sports equipment’s. For such, Nike also creates as series of versions
for a product in order to meet the preferences of consumers.
Geographic segmentation is another market segmentation approach in which the
market is divided on the basis of location, in this type of market segmentation approach the
companies identify user on the basis of their location such as dear country state, zip code or
on the basis of urban, suburban or rural areas. For example, McDonalds classifies their
market segment on the basis of geographic segments where the company focuses on dividing
audience on the basis of different countries, states, religion and cities. The fast-food chain
focuses on meeting demands of consumers on the basis of geographic segment where they
target loyal markets in different geographical regions and offer customized menus through
which consumer demand can be met.
Psychographic segmentation is similar to demographic segmentation whereas this
form of market segmentation approach deals with characteristics that are related to mental
and emotional beings. In this form of market segmentation, the companies subsegment the
audience on the basis of their personality traits, interest, believes, values, lifestyle and
attitudes (Goryushkina and et.al, 2019). For example, Apple utilize psychographic
segmentation which is helpful for the company to create brand personality which can fit into
the perception of their users. With psychographic data, Apple can communicate luxury
minimalism and class to its target audience to create marketing strategies.
CONCLUSION
From the details study of essay, market segmentation is the strategy which is followed
by companies through which an organization broadly classify the business market which

comprises of existing and potential customers into sub groups on the basis of similarity of
groups. After analysing the essay common this can be stated that market segmentation is a
marketing approach our practice which allows in attracting right customers, increasing brand
loyalty, identifying niche market, creating profits, driving business growth, better product
development, differentiating brand with competitors and increasing brand loyalty. All these
factors help companies in dividing the audience according to different factors which can
reflect change in each sub segment of market. The most commonly use market segmentation
variables are demographic, behavioural, geographic and psychographic segmentation factors
which are kept in mind by marketers while dividing the audience as per their preferences.

REFERENCES
Books and journals
Bian, Y., Song, K. and Bai, J., 2019. Market segmentation, resource misallocation and
environmental pollution. Journal of Cleaner Production. 228. pp.376-387.
Dolnicar, S., 2019. Market segmentation analysis in tourism: a perspective paper. Tourism
Review.
Goryushkina, N. E and et.al., 2019. Basic principles of tourist services market segmentation.
Online
What Is Market Segmentation, 2019 [Online]. Available through
<https://www.lotame.com/what-is-market-segmentation/#:~:text=To%20segment%20a
%20market%2C%20you,Types%20of%20Market%20Segmentation>
Market Segment, 2021 [Online]. Available through
<https://www.investopedia.com/terms/m/market-segment.asp>
THE IMPORTANCE OF MARKET SEGMENTATION, 2021 [Online]. Available through
<https://www.imsmarketing.ie/business-strategy/the-importance-of-market-
segmentation/#:~:text=Segmentation%20helps%20marketers%20to%20be,most
%20likely%20to%20purchase%20products.>