Market Segmentation and Differentiated Marketing — Global Strategy

Globally, the market may be segmented geographically such as Middle East, North America, Western Europe, Eastern Europe, South Asia etc. An international firm may resort to geographical segmentation of even individual countries, particularly when the country is very large in size like India or USA or when the weather and climatic conditions, topographical features, demographic characteristics etc, vary significantly between different regions of a nation.

Undifferentiated marketing is characterized by market aggregation, i.e. treating a whole market as a single unit whose parts are alike in all major respects. The entire market is sought to be tapped with a single marketing mix.

Differentiated marketing, on the other hand, essentially involves market segmentation the opposite of market aggregation.

Market segmentation is the process of dividing heterogeneous market for a product into groups of customers so that each such segment is amenable to a separate marketing mix. The objective of market segmentation and differentiated marketing strategy is to increase the business of the company by more effectively serving the needs of the different segments of the consumers.

Thus, while market aggregation and undifferentiated marketing take a shotgun approach, market segmentation and differentiated marketing is a rifle approach.

Market aggregation and undifferentiated marketing are appropriate when the Market is homogeneous i.e. when customer characteristics are the same. Market segmentation may be desirable when the market is heterogeneous i.e. when the relevant customer characteristics differ. In the language of economic theory, in market aggregation the seller assumes there is a single demand curve for his product. In effect, the product is assumed to have a broad market appeal. In contrast, in market segmentation the total market is viewed as a series of demand curve. Each one represents a separate market segment calling for a different product, promotional appeal, or other elements in the marketing mix.

Differentiated marketing is based on the appreciation of the heterogeneity of the market, i.e. income levels, tastes and preferences, usage conditions, purposes of use and other consumer characteristics relevant to marketing differ between different groups of consumers.

There are a number of common bases for segmentation.

Market may be segmented geographically if consumer / market characteristics differ from region to region.

Market segmentation is necessary not only for differentiated marketing but also for selecting the appropriate market segment / segments to concentrate on. Whatever may be the basis of segmentation a market segment should possess certain essential characteristics.

A market segment shall be:

1. Measurable i.e. it should be possible to estimate the size of the segment.
2. Substantial i.e. the segment should be large enough to e profitable.
3. Differentiable i.e. a segment should be different enough to justify a specific marketing mix that is different from those for other segments.
4. Accessible and Actionable i.e. it should be possible to clearly identify the consumers of the segment and effectively reach them with a specific marketing mix

Most marketing departments use a limited number of unconnected technology tools such as e-mail, spreadsheets, project management software, and customer databases. But unconnected tools cannot deal with the increasingly complex nature of business, the increased number of collaborations, and the global scope of operations. Companies use information technology to improve the management of their marketing resources. They need better templates for marketing processes, better management of marketing assets, and better allocation of marketing resources. Certain repetitive processes can be automated. This drive is going under such names as marketing resource management (MRM), enterprise marketing management (EMM) and marketing automation systems.

A survey of 68 companies of different sizes expeorting a variety of industrial products revealed that over 70% of them differentiated their activities between domestic and international customers. Further, almost a quarter of companies differentiated their selling activities among international customers.