Market Segmentation

Market Segmentation

Market segmentation is a process used in business to enable them to target their products/services better to the right customers. By businesses carrying out market segmentation, they will be able to identify the specific needs and wants of customers in order to produce more revenue by providing products that meet customers’ needs and expectations. Market segmentation allows businesses to clearly identify their customers with similar wants by dividing larger markets into smaller and more identifiable sections. A segment of the market is a group of customers who have relevant characteristics and respond in a similar way when given a set of marketing efforts and once this has been developed, it is easier for the business to advertise their products in a way that would be effective for customers and that they would want to buy it.

For Stardust Fragrances, market segmentation will be a useful tool as it will enable them to identify their customers’ needs as well as selling products to particular groups in a segment, by selling certain fragrances to target the customers’ needs and wants. An example of this in a business situation would be if a particular segment of the market is interested in a perfume that would purely be for evening occasions and want a fruity scent, Stardust Fragrances should not sell this segment of the market a casual perfume with a floral scent as this would not be beneficial to Stardust Fragrances and this could lead to these customers losing interest in the business and will not make any future purchases. However, by using market segmentation, Stardust Fragrances will avoid loss of revenue through advertising costs because they will not be advertising their products to the wrong people. In addition to this, if the business produced and promoted a perfume that was for special occasions that had a fruity smell, these customers would be interested and would be more likely to return and make future purchases. The revenue created from these products could lead to more developments into new products which would consequently bring a new target audience to the business and this links to Stardust Fragrance’s objective “to enlarge the market by increasing the product range” whilst at the same time bringing more profit.

Another benefit to market segmentation is that it allows Stardust Fragrances to segment a small group of potential customers, whereas if the segment is too large, all of the customers may not have their needs addressed and the customers may not visit the business again. Market segmentation also helps to achieve another objective, “To maintain market share by retaining at least 70% of their customers” which is vital in order to survive in the business world.

There are different methods in which Stardust Fragrances can use in order to segment to market. These methods include: Geographic, Demographic, Behavioural and Psychographic segmentation. Geographic segmentation is a method uses to divide to market by basing the customers on the region/country in which they live in and dividing between rural and town areas. This method also segments by climate as well as dividing the market by the country. This method of segmentation will not be useful to Stardust Fragrances and the promotion of “Release” as the potential customers that would buy this product may not be from the same area in which Geographic Segmentation demonstrates. If Stardust Fragrances used this method of segmentation, they may advertise their products to the wrong group of people which will consequently lead to a reduction in revenue. In order to geographically segment the market, Stardust Fragrances would most likely used a site known as “Acorn” as this is a useful site that allows for large