Retail Market Segmentation and its benefits, Kinds of Markets

-

Retail Market Segmentation and Its Benefits, Kinds of Retail Markets

Retail market segmentation involves dividing a broad consumer or business market into sub-groups of consumers based on shared characteristics. This approach helps retailers tailor their strategies to meet the specific needs of different customer groups, improving marketing effectiveness and operational efficiency. Below is a detailed yet concise overview of the significance of market segmentation, its benefits, and the various kinds of retail markets.

Significance of Retail Market Segmentation

1. Identifying Target Customers

  • Purpose: Helps retailers pinpoint specific groups within the broader market.
  • Application: Focuses marketing and sales efforts on distinct customer segments.
  • Example: Targeting high-income professionals with luxury goods versus budget-conscious families with value products.

2. Deciding Store Location

  • Purpose: Assists in choosing optimal locations for new stores based on target demographics.
  • Application: Locations are selected to match the concentration of the desired customer base.
  • Example: Opening a high-end boutique in affluent neighborhoods and discount stores in budget-friendly areas.

3. Understanding Consumer Behavior

  • Purpose: Provides insights into why different consumer groups respond differently to marketing efforts.
  • Application: Develops more effective marketing strategies tailored to each segment.
  • Example: Customizing advertising messages for tech-savvy millennials versus traditional shoppers.

4. Deciding Retail Marketing Mix

  • Purpose: Tailors the 7 Ps (Product, Price, Place, Promotion, People, Procedure, Presentation) to specific segments.
  • Application: Aligns marketing mix elements with segment characteristics.
  • Example: Offering premium pricing and exclusive promotions for high-end customers.

5. Deciding Merchandise Assortments

  • Purpose: Determines which products to stock based on segment preferences.
  • Application: Optimizes inventory based on segment needs.
  • Example: Featuring sportswear prominently in stores near fitness centers.

6. Deciding Promotional Campaigns

  • Purpose: Designs promotions that resonate with different segments.
  • Application: Targets promotions to specific consumer groups at the right time and place.
  • Example: Seasonal discounts for students during back-to-school periods.

7. Positioning

  • Purpose: Establishes a retailer's market position relative to competitors.
  • Application: Differentiates the retailer based on target market segments.
  • Example: Positioning as a luxury retailer versus a value-oriented discount store.

Benefits of Retail Market Segmentation

1. Adjustments in Marketing Appeals

  • Benefit: Enables tailored marketing efforts for different segments.
  • Application: Creates specific marketing programs to meet diverse customer needs.
  • Example: Designing separate ad campaigns for different age groups.

2. Determining Market Opportunities

  • Benefit: Identifies unmet needs and market gaps.
  • Application: Adapts product offerings based on competitive analysis.
  • Example: Introducing new product lines based on emerging consumer trends.

3. Designing a Product

  • Benefit: Develops products that align with target segment needs.
  • Application: Customizes product features and designs.
  • Example: Designing ergonomic furniture for office workers.

4. Developing Marketing Programs

  • Benefit: Allocates resources and budgets more effectively.
  • Application: Tailors marketing programs to segment responses.
  • Example: Allocating more budget to high-value segments.

5. Media Selection

  • Benefit: Chooses appropriate advertising channels.
  • Application: Targets media spend based on segment preferences and behaviors.
  • Example: Using social media ads for younger consumers and traditional media for older demographics.

6. Efficient Use of Resources

  • Benefit: Maximizes resource utilization.
  • Application: Focuses efforts on high-potential segments.
  • Example: Small businesses targeting niche markets to optimize limited resources.

7. Helps in Fixing Prices

  • Benefit: Sets prices based on segment price sensitivity.
  • Application: Adopts different pricing strategies for different segments.
  • Example: Implementing premium pricing for luxury segments and budget pricing for cost-conscious shoppers.

8. Better Service to Customers

  • Benefit: Enhances customer service and satisfaction.
  • Application: Tailors service approaches to segment needs.
  • Example: Offering personalized shopping experiences for high-end clients.

Kinds of Retail Markets

1. Specialty Stores

  • Description: Focuses on a specific product line or category.
  • Example: Stores specializing in footwear or jewelry.
  • Advantages: Expertise in niche areas and targeted customer base.

2. Department Stores

  • Description: Offers a wide range of product lines under one roof, organized into departments.
  • Example: Stores like Macy's or Akbarallys.
  • Advantages: One-stop shopping experience with diverse product offerings.

3. Supermarkets

  • Description: Provides a large assortment of low-cost, high-volume, self-service products.
  • Example: Big Bazaar.
  • Advantages: High convenience and variety with competitive pricing.

4. Discount Stores

  • Description: Offers standard merchandise at lower prices with high volume and low margin.
  • Example: Dollar General.
  • Advantages: Attracts cost-conscious consumers with value pricing.

5. Convenience Stores

  • Description: Located in easily accessible areas, offering groceries and non-food items at higher prices.
  • Example: 7-Eleven.
  • Advantages: Convenience and accessibility with extended hours.

6. Shopping Malls

  • Description: A large retail complex with multiple stores and entertainment options.
  • Example: Mall of America.
  • Advantages: Diverse shopping experience and integrated amenities like food courts and theaters.

7. Factory Outlets

  • Description: Operated by manufacturers to sell surplus or discounted goods directly to consumers.
  • Example: Nike Factory Store.
  • Advantages: Offers brand products at reduced prices, often located in outlet malls.

Market segmentation and understanding the different types of retail markets allow retailers to effectively target their offerings, optimize their marketing strategies, and enhance customer satisfaction. By catering to specific consumer needs and preferences, retailers can improve their market position and achieve greater business success.