Student Corner - 257

SEGMENTATION

We were discussing so called ‘Deadly Sins’ that an ill-performing company is likely to be victims of; if immediate actions are not thought of and implemented, the company, sooner or later, will end up in a stale mate; that is,  it will have neither enough finance to sustain the company nor strategies to redeem the company from the deadly sin situation. Peter Drucker, a marketing genius of international repute, lists ten such deadly sins and also suggests remedies for such sins. The remedy for the first deadly sin - The Company is not sufficiently market focused and customer driven—is segmentation to become sufficiently market focused.

Segmentation is indispensable tool in marketing since it helps you focus on the right target, that is, persons who are most likely to buy your products, that is, persons who will turn your customers.  We know resources cannot be ill-spent , wasted. In majority of the companies, big or small, resources are limited compared with the scope and range of marketing strategies. Strategies are expensive in the sense they consume the very precious resource of the company, the finance. Segmentation minimizes if not totally eliminates wrong spending. Your attention is given to the right target with a right perspective. By saving resources, the chance of reaching a fair ROI is quite bright. In a way, all marketing efforts are focused on achieving a fair desirable ROI (Return On Investment) Now, let us see what is segmentation and why it commands so much attention from the company.

To put it simply, that is with much less business management terminology, segmentation means dividing something into smaller units. You have a vast growing market-related population, that is, there are thousands and thousands of people about you, around you, who are prospective buyers of products. Almost all individuals buy some products or other, beginning from a less expensive tooth powder to very costly gold ornaments and jewelry. All of us already are customers thru our choices of products. And you very well know that there are many types, brands of tooth powder, less expensive to more expensive; you also know there are many brands of toothpastes as well. You cannot expect the entire population to use one kind of toothpowder or paste. You also know there are advertisements for many of the toothpowders and pastes. Despite the presence of so many ads, you buy one kind of toothpowder and you stick to it. 

This very simple fact explains the basic facts of segmentation. Say you see an ad for a costly at least somewhat costly toothpowder or paste. What is the effect it has on you? Almost very insignificant response you show to the ad because you are not using it.  The company also knows that its ad aims at such people who are already using it and at some small audience that can afford to spend on it.  The ads are so framed—there are expert agencies for that and company employs them for the ads—that there are some simple harmless hints that this ad is meant for those who can spend more on toothpowder. This ad is a very intelligent campaigner for the company and it is subtly exploiting the principle of segmentation.

 We will see some more of it and see the benefits of segmentation to the company in particular in our next.