What is meant by market segmentation?
Market segments are made up of groups of people or organizations that are similar to how they react to a particular marketing mix or in other ways that make sense for marketing planning purposes.
The whole area of market segmentation is based on this idea that consumers have different needs. They will find value in different products. They will react differently to marketing communications. They will be to different price points.
Because of this, enterprises operate more efficiently if they can act on these differences. A business that is trying to offer one undifferentiated product with general marketing support will always lose to more agile competitors who have specific goals and know how to serve them.
We often work on health plans. In the world of Medicare Part D, for example, health plans are struggling to understand the new rules, observing deadlines. But today's difficulties will give way to a market where segmentation will be of great benefit, because mass marketing will not work.
Which segment?
Obviously, all competitors cannot target the same segment and succeed. A common mistake is to suggest that you should focus on “heavy buyers,” who in fact are often not the most profitable group. For example, a consulting firm may decide to abandon targeting Fortune 500 (TM) companies, which are heavily contested by Big Four, an accounting / consulting firm, and instead operate in medium-sized business markets. “Substandard” lenders and credit card companies know exactly who their prospects are, and don’t disturb advertising in Money magazine or finance public television shows. D-series players may find niches for the elderly, for example, with Medigap's private policies and specific interests or needs that this plan can solve.
For health plans, market segmentation is not common. Part of this is due to medical plan cultures designed to serve large health plans and retirees based on employers. But Medicare Part D is an unprecedented public-private attempt to create a consumer market. And Medicare Part D is just one of the elements of far-reaching efforts to use private health insurance plans to control Medicare spending. We believe that market understanding developed through segmentation will be implemented in various ways.
Identifying and targeting one or more segments instead of the entire market allows a firm to use its resources more efficiently. Market segmentation means that products and messages are more aligned with the needs of individual consumers.
Segment Research
As a basis for market segmentation, some type of systematic research is required. Most often, this study involves a sample survey that should be performed by a research expert.
Segmentation studies are aimed at solving a number of fundamental issues:
1. How many segments are there?
2. How big is each segment?
3. How do you define segments?
4. How do you describe the segments?
Segments are usually defined by such dimensions as:
o Behavior — for example, purchase frequency, total expenses, or a mixture of stores that are bought (switching, investigating, comparing, delegating decisions) or
o Characteristics — for example, surveying for consumers or SIC codes for enterprises (health status, subsidy status, current coverage status) or
o Relationships — for example, financial sophistication, fashion orientation, or a propensity to adopt new technologies (interest, optimism).
Variables that are used to define segments are called the “base”. The base is selected in light of how the segmentation will be applied. For example, direct marketers carefully analyze their database in terms of customer behavior. Other segments are based on consumer motives and concerns. The marketer chooses this because the incentives and fears encourage consumers to act on the proposal.
We do not believe that there is only one "correct" way to conduct segmentation studies, and there is no single set of segments awaiting "discovery." While analysis must use objective statistical methods, any number of judgments, preferences, and practical considerations go into the design of the process and the final determination of the structure of the segment. The same data set can produce different segments.
Market segmentation offers opportunities for healthcare plans to improve marketing and sales, staff training, customer service, new recruitment, business planning, and public relations. It will be used by health plans that want to ensure that they come out of this period of drastic changes in the Medicare market as a coverage provider with relevance and viability. Part of this is achieving sales and marketing goals. Part of this is to establish a market position when consumers think of you as you would like them to think of you.
Compared to other forms of marketing research, sample sizes for segmentation studies are usually large. The simple reason is that you need to be able to profile several sub-samples (segments) with a high degree of accuracy, and not just a general sample. It is unusual to use less than 500 and use it non-standardly 2000-3000.
Analysis
The most difficult and opaque part of the segmentation study is segment output, which literally means dividing the sample into a small number of exclusive clusters. This is almost always done by applying some form of statistical cluster analysis. The analyst usually tries several different cluster solutions. Although there are objective statistical indicators of the quality of a cluster decision, they are no more important than conscious management judgment. Researchers often offer two or three opportunities to discuss.
The “correct” number of segments is subjective, but in practice companies tend to settle on four to eight segments. In a diverse, complex, and profitable category, more may be needed.
Coordination of the number of segments, as well as the labels that will be attached to them, always requires careful study of their full profiles. Although segments can be defined with one class of basic variables (for example, relationships with fashion and shopping), you always need to describe segments in terms of other variables (for example, demographics, spending, media preferences, preferred brands) that were not part of the definition of segments.
application
An important result of most segmentation studies is the tool for classifying other consumers in segments. This can be a formula where, by asking a small number of questions, you can place a “new” consumer in one of the segments. This may be a set of logical rules.["ifthetotalbalancesheet>$10000+hasaminimumbalancesheet+debtpayable["ifcombinedaccountbalances>000+haveatleastthreeaccounts+non-mortgagedebt["еслисуммарныйбаланссчета>000+имееткакминимумтрисчета+задолженностьпоипотечнымкредитам["ifcombinedaccountbalances>000+haveatleastthreeaccounts+non-mortgagedebt
