Primera generación

There are various definitions of market segmentation in the literature. According to the author Momčilo Milisavljević that is: „the process of aggregation of business buyers where the organization looks for similarities, i.e. buyers that are similar in the sense of certain dimensions and does their aggregation in relatively homogenous submarkets which can be effectively serviced by appropriate rate of rentability“. Authors Čedomir and Jelena Avakumovic define market segmentation in the following way: „market segmentation is a planned and strategic delayering – the division of the whole market to smaller segments – parts“.

Said in the simplest way, segmentation is the division of market in the homogenous groups of consumers. It is based on the assumption that the consumers are different and that because of that their behavior and their reactions in the purchase process will be different. These diversities are usually seen in the needs, demands, wishes, culture and habits of the consumers.

Market segment should be homogenous in respect of (Avakumović, Avakumović, 2011, p.31):

 geographical area;

 consumers’ groups;

 demand and supply;

 competition;

 conditions of sale);

 legal regulative etc.

It is good for the company for consumers to be as similar as possible within one segment, and for the different segments to be as different as possible. In segmentation process there is an assumption that the defined market segment will not maintain its homogenous characteristics for long. Consumers and their fluctuations contribute greatly to this.

Every segmentation is characterized by the following aspects (Ibid, p. 32):

 goals;

 criteria;

Main goal of market segmentation is to divide the consumers in order for the company to adapt its supply to each and every segment respectively. By doing this a greater level of consumers' needs satisfaction is achieved, because every segment of consumers will get the supply that is adjusted to them specifically.

There are more criteria for market segmentation. The most common are:

 geographical;  demographic;  economic;  intensity of consumption;  sociological;  psychological etc.

According to the geographical criterion, the whole market is divided into small areas (the whole market at the state level can be divided into larger cities where every larger city represents one market segment).

Based on the demographic criterion the consumers can be divided according to the gender, age, education, profession etc. As an example of this criterion of segmentation we can take the world-known company „Nivea“. This company divided its consumers according to the gender, age, skin type etc. and adapted its supply to each and every segment individually. That is why we have a range of products „Nivea for men“ made for men, and a special range of products for women only, then products for dry skin, sensitive skin etc.

Figure 1: „Nivea“range of products for men

Source: Google Images

According to the economic criterion, the consumers are divided according to the purchasing power, income and standard of the family members etc. In this respect the consumers can be divided to those with the purchasing power above average, average and below average. As an example we can take the companies in car industry which produce and sell economic cars for middle economic class and luxurious cars for buyers that have a purchasing power above average. The following pictures illustrate this.

Figure 2: „Fiat Punto” for the buyers with average purchasing power in Serbia.

Source: Google Images

Figure 3: „Mercedes S class“for the buyers with great purchasing power.

Source: Google Images

Intensity of consumption of products as a criterion for market segmentation divides the consumers to intensive, medium, weak and minimal. Companies are most interested in intensive consumers because they buy and use intensely, and it is not so interested in minimal consumers because they rarely buy and use products.

Sociological criterion divides the consumers according to them belonging to a certain sociological group (class). Sociological group is marked by education of its members, culture etc.

According to the psychological criterion, the consumers are divided according to their psychological traits like intelligence, temperament, character etc. For example, according to the temperament the consumers can be divided into impulsive, indecisive, the ones that think well and compare the prices and quality before they buy a product etc. As an example for this criterion of market segmentation we can take the producer of cars „Honda“. This company directed its business efforts and activities towards the target segment that it described in the following way: “rebellious and independent young people“.

Figure 4: motorcycle „Honda“

Source: Google Images

The third important factor of segmentation is its benefits. There are numerous benefits that a company gains from the market segmentation:

 segmentation enables determining of differences among consumers, in order for an organization to adapt its supply to every segment individually (the benefit of this is seen in a more complete satisfaction of consumers' needs);

 easier gathering of information for defining the marketing goals, plans and strategies;

 making decisions for one segment is easier and simpler than making decisions for the whole market;

 research of target segment is cheaper and simpler than researching an entire market;

 product positioning is easier to realize in one segment than in the whole market.