Your understanding of the differences between Mass Marketing and Niche Marketing should now be completed:
- Mass Marketing is selling the same product to the whole market with no differentiation of price, place, or promotion strategies;
- Niche Marketing, on the other hand, involves differentiating products, prices, locations, and promotion strategies.
One of the main problems with mass marketing is the fact that customers are not being offered exactly what they want/need but a general solution to their problems (everyone gets the same).
What's the solution to this problem?
The simple solution is to divide the market into smaller groups of consumers - a process called segmentation:
Segmentation allows businesses to divide the market in smaller groups (segments) based on their particular needs/preferences.
Segmentation is usually done with the use of two main variables:
1. Geographic Segmentation: dividing customers by their geographic location (regions, countries, cities, neighborhoods, etc.) because customers' location impacts factors such as their culture, religion, beliefs, climates, etc.
2. Demographic Segmentation: dividing the market according to the population's characteristics. People within the same age, social, class, education, occupation, etc. may have similar needs/wants.
Here are some of the main benefits for companies to go through the process of segmentation:
- When you divide the market into smaller groups you are able to meet their needs better and your products are likely to sell more.
- With segmentation small companies can also be successful as they can play in smaller niches rather than competing with large companies on the mass market.
- The process of segmentation allows companies to identify groups of consumers with specific needs whose needs are not being met by existing companies. Therefore, segmentation allows for business opportunity identification.
- Dividing the market into smaller groups will ensure efficient use of Marketing resources. Spending Marketing resources with customers who might not need/want your product is considered a waste.
- Segmentation allows for price discrimination to take place:
The practice of charging different prices to different segments (groups of customers).
Airlines use price discrimination to charge different prices to different groups of customers (business travelers, families, etc.).
It allows for higher profits to be made.
Activity 10.4 (p. 151)
To-Do List:
Exam Practice Questions (p. 152)
Chapter 10 - Marketing, Competition, and the Customer
Lesson 37
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