Levels of Segmentation

30/12/2021 0 By indiafreenotes

4 levels of market segmentation are:

Mass Marketing or Undifferentiated Marketing

Mass marketing refers to the strategy of targeting the entire potential customer market by means of a single marketing message. The marketing strategy used in this segmentation does not target the specific requirements or needs of customers. Mass marketing strategy, instead of focusing on a subset of customers, focuses on the entire market segment that can be a probable customer of a product.

An example of mass marketing strategy is of Baygon cockroach spray or Mortein mosquito repellent coils that target all its potential customers through a single marketing message.

Advantages of Mass Marketing

  • Only one marketing plan is required, and no specific market segment is targeted. One marketing campaign targets the whole market, facilitating marketing economies of scale.
  • Economies of scale can be obtained in mass markets because of enormous size. Thus, the average cost of bringing the product to the market will be lower, and hence, profit margins higher.
  • Providing products for a mass market enables establishing a more extensive base of customers. This will generally increase profitability.

Limitations of Mass Marketing

  • In mass marketing, the competition is usually broad and extreme.
  • There are very high barriers to entry for mass markets. Often incumbent competition has invested in capital equipment, large-scale factories, offshore centers, efficient supply chain management processes, etc. Huge competition can make it extremely difficult to compete in a mass-market as a new firm successfully.
  • Mass marketing is less focussed, requires more resources.
  • The company can suffer a high loss if the marketing strategy fails.

Product-Variety Marketing or Differentiated Marketing

In Product-Variety Marketing or Differentiated Marketing, the marketer divides the market into different segments depending on the consumer’s buying behavior, requirements, purchasing power, location, and age level.

In product-variety marketing, the seller produces two or more products that have different features, styles, quality, and so on. Subsequently, Kohinoor produced several kinds of toothpaste bearing different brands with other packages. They were designed to offer variety to consumers rather than creating various appeals to different market segments.

Differentiated marketing helps the marketer to connect to each type of customer in the best possible way. Most companies use different market segments for marketing its entire list of products which caters to different market levels.

The promotional and advertising activities for a particular focus only to the target market for that product.

The example of segment marketing within clothing industry may be men, women, casual, fashionable and business clothing segments.

Concentrated Marketing or Niche Marketing

This strategy of marketing focuses on a narrower customer segmentation. Customers may want or desire a product that is not met completely by the products offered in a market. When companies move forward and develop highly specialized products to offer these customers their specific needs, they offer distinct products in a market that caters to specific customer segments only.

Mountain bikes are an example of a niche marketing segment. where the market segmentation will be individuals interested in mountain biking only. Since not every bike manufacturing company caters to mountain bikers, it is a niche segment. Companies that produce mountain bikes target the niche segment of mountain bikers and cater to their specific needs, preferences and requirements.

Advantages of Niche Marketing

  • When a specific market segment is targeted in a firm’s marketing, marketing tends to be more focused and likely to have a greater appeal within the targeted segment. Mass marketing is not as focussed and, as such, tends to focus on the ‘average’ consumer.
  • Businesses can become highly specialized in finding out the needs and wants of a niche market they are targeting. With needs and wants being better met, customer loyalty can ensue.
  • Competitive rivalry within a niche market is less than that for broader markets. Less competition can translate into increased pricing power for a firm’s differentiated products, which, in turn, can lead to increased profitability.

Limitations of Niche Marketing

  • Niche markets, by their definition, are small. The number of total potential customers in the market is limited. Niche marketing strategies may miss potential customers and depress sales revenues.
  • Economies of scale may not be obtained in niche markets due to their limited size. Thus, the average cost of bringing the product to the market will be higher, leading to higher prices and or lower profit margins.
  • Profitable niche markets with low barriers to entry are likely to attract new competitors into the industry. Niche markets are small and cannot sustain a relatively high number of competitors.

Micro Marketing

Micro marketing follows an even narrower segmentation marketing strategy, catering to the attribute of a much-defined subset of potential customers such as catering to individuals of a specific geographical location or a very specific lifestyle.

An example of niche marketing is luxury cars that are very high priced and offer exceptional features such as high speed, customized look, etc. Since these cars are very expensive and limited in number, the niche market for these vehicles target rich, car lovers that are interested in the unique features and has the financial capability to buy them.


Local marketing

In Local marketing, the seller or the marketer only concentrates on the local market. The products also have the local appeal or the local usages, and the promotional activities are planned based o the location only with local flavor.

Here the cost remains high due to lower production, and competition is also less. Marketers can concentrate on mom in the local market to reach all the customers in the region. The best example would be the marketing of regional chain of hotels or restaurants, locally produced food products, etc.

Local marketing can be studied from both the retailer and manufacturer perspective. For the retailer, local marketing implies the optimization of the store’s marketing mix.

For the manufacturer, local marketing implies optimizing the product’s marketing mix at the store level. We focus on the interaction between manufacturers and retailers, how manufacturers and retailers optimize the marketing mix for a product (category) at the store level.

Individual Marketing

Individual marketing focuses on satisfying the needs and wants of individual customers it’s also known as one-to-one marketing and customized marketing; it’s the segmentation level where the seller offers a customized product to the consumer.

In simple words, making and selling product(s) according to the needs and preferences of the consumer.

For example, a Fabrics company will cut your cloths according to the needs of the individual customers.

Individual Marketing happens when several specific attributes are “fulfilled” will the personal message be automatically triggered by one person.

The more attributes included triggering the message, the more relevant it becomes for the person. Let’s look at the type of attributes.

  • Customer profile attributes: A simple message commonly used is the birthday month promotion.
  • New and renewal: Sending automatic messages triggered to the person based on the new, active, lapsing, or inactive customers (or members) group. The content will be relevant based on their activity level.
  • Buying behavior: The spending history (the type of product, average spend, frequency, changing spending patterns) is used to trigger a message.
  • Channel behavior: the channel interactions (web, mobile, e/m-commerce, social media, visits) is used to trigger a message.
  • Customer sentiments: may include feedback forms, service cases, likes on social media.
  • Location: These are often real-time messages being sent when a person is close to, outside, or inside a particular location.