Step 1: Market Restriction
First of all, you need to define the boundaries of the target market, based on the business definition from the marketing plan. At the same time, you need to take into account the type of competition. Often, the business definition is formulated too vaguely, which makes it difficult to find competing companies. Many marketers find a way out in studying market demand and needs for subsequent segmentation.
Step 2: Define the criteria by which the market will be segmented
The selected variables employment database that serve as criteria need to be sorted to identify the most useful ones for the market segmentation process. Marketers typically use all the parameters that can potentially be useful, and then analyze the results to categorize consumers. This approach is appropriate when the market is segmented based on the lifestyle of the target audience. However, it is more effective to select a suitable base in advance. In addition, the variables that are most characteristic of a given product have a greater influence on market decision-making in practice.
Step 3: Collecting data for segmentation
The necessary information can be obtained through qualitative and quantitative research:
Qualitative research
Marketing specialists identify the motivation of product consumers, determine their attitude towards this product, and seek to understand their behavior. Usually, questionnaires are used for these purposes, which, in addition to the above, allow one to find out the attitude of the target audience towards competitors' products. Such information will be useful for a timely response to a competitive threat.
Quantitative research
Key market parameters and their relationships are determined for it. The necessary information is collected through questionnaires or interviews. The reliability of such research directly depends on the number of participants among target consumers - the more there are, the more reliable the results. The size of this sample, in turn, is determined by the established level of accuracy, as well as the methods used in the collection process. Of great importance are such indicators as the target audience's awareness of brands present on the market, the audience's attitude to this product category and to the media, and various consumer habits.
Collecting data for segmentation