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Watching: What is Segmentation?

Market segmentation is a very commonly used marketing term today, simply means: “Dividing the market into many segments and then choosing the part that we are able to serve and exploit well. best”. But why do that? Why not “collect all the Jiang San” to get more profit and market share for yourself? There are 3 reasons that businesses today, especially those who are about to start a business, are so focused on finding the best market segment for them:

The market’s demand is huge, no one, even global corporations, can satisfy all of it.

Today’s customers are increasingly differentiated according to their preferences, styles, incomes, etc., without segmentation, they cannot create products that satisfy consumers.

Based on its own resources and strengths, each company can wholeheartedly focus all resources to best meet customer needs.

Currently, we mainly have 4 bases for market segmentation:

By geography: North, Central, South, District 1, District 5, District Binh Tan, urban, rural,… Enterprises can still serve in many different regions if they have enough capacity, but need to pay attention to the difference of customers products in each region.

Psychological: Personality, social class, lifestyle, etc.

By anthropology: Age, gender, language, education, income, etc.

By behavior: When to buy, how many times to use the product, how to make decisions, how loyal to the product, etc.

Similar to B2B (Businesses to businesses), the size, location, industry, etc. will become the criteria for dividing the market.

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The next step, we need to consider 4 factors to make sure the market segment we choose is suitable:

Measurable: Market size, purchasing power of consumers… are those numbers able to be found and measured by businesses?.

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For example: After Tiger Beer’s very successful Rock Unite 2007 contest, a series of rock competitions and shows took place because at that time a small wave of rock love arose in Saigon:

However, the decision to invest in a CD rock shop or an epic Rock coffee at that time was a very risky thing because it was almost impossible to measure the market size. Rock fans and especially longtime rock listeners, not everyone likes to sit around at any Rock cafe and Rock show, and constantly update the CD.

2. Substancial (Significant): The segment must be large enough and bring in enough profit to “feed” the company

For example: After waking up one night, the Marketing Director of Company A, specializing in the production of toothpaste, came up with the idea of ​​​​a toothpaste product for the elderly segment – to meet the needs of people to protect their dentures. :

The product has no competitors, the demand is there, but this “segment” cannot be “eaten” because the profit brought is not as high as when targeting other objects.

3. Differential: The segment must be really different from other segments,

For example: In the service industry, especially in food and beverage, segmentation is mainly based on food preferences, income and geography because a deeper segmentation by gender and age will inadvertently reduce the size. piece of cake that the business is aiming for.

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The simple reason is that the needs of men and women, young people and middle-aged people are not really different, when they want to eat, they will all go to their favorite bakery.

4. Actionable: The company has enough human and financial resources to attack this segment. In addition, if the segment has too many heavy competitors, it should be “avoided”.

For example: The most fierce market in the last 2 years still belongs to the shampoo industry with a series of giant brands occupying such as Sunsilk, Clear, Head & Shoulder,,…. After ICP launched X-Men, Clear launched, albeit a little late, Clearmen to attack that newly “awakened” men’s shampoo segment, not to mention the Romano brand – the first male shampoo that contributed The part that makes up a segment is very difficult to “eat”.

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After completing the segmentation process, businesses will have a panoramic and extremely detailed view of the market they are looking to jump into, which parts are not suitable, which are for them. If you just start working, when you realize that the segment you have chosen is too small or the company’s potential cannot meet the needs of customers, it is too late, it will be very costly in terms of time and money as well as images. brand to start over. 2 examples of choosing the wrong market segment from the Banh Beo Blog:

Remember the lesson of Champagne perfume. When they try to entice more customers for their ultimate luxury perfume product by lowering the price, they not only do not have more customers, but old customers also abandon Champgne when they feel they are “undervalued”. “Follow the perfume. The opposite is also true, imagine Miss Saigon launching Miss Saigon Delux products with level with CK, Channel… can you predict whether it will succeed or fail? Definitely a failure because existing customers won’t accept high-priced perfumes, and the aristocracy won’t wear Miss Saigon brand perfume no matter how fancy it is because the word “Miss Saigon” evokes a feeling. “cheap perfume”. (Blog Beo Cake)

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Market Segment

The story of the guy who sells apples (Good article – TYM recommends reading)

What is market segmentation?

Market Segmentation in Marketing

The above article is very theoretical, so TYM tried to summarize and add some illustrations to make the article less dry, I don’t know if many pictures make people confused? Give me your opinion :8

See you in the next article on “Target Customer Portrait”.