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.
