Market segmentation and target marketing are business activities that form part of the marketing strategy of business entities. Though the two terms are related to each other and belong to the same marketing process, they actually signify the different things. The meaning and differences between these two marketing terms need to be comprehended so that students and business people don’t use them interchangeably but appropriately.

Market segmentation is the process through which the market is divided into various groups on the basis of demographic, geographical, psychographic and behavioral attributes of the population. On the other hand, target marketing refers to the marketing activities carried out on the selected group of customers that the business concentrates on for the sale of their products, services and solutions. Despite the similarity between the two, market segmentation should be carried out before determining the target market. This article will discuss the definitions of market segmentation and target marketing and then explain how they are different from each other.

Definitions and meanings

Market segmentation

Market segmentation is very significant aspect of the overall marketing strategy of a business. The formation of successful marketing strategy requires companies to identify their target market and this is where the mark segmentation comes in. Market segmentation is basically an approach that companies follow to divide the market into well defined small groups or segments on the basis of some common characteristics.

Market segmentation is extremely important for companies because it is not possible to fulfill the requirements of all customers with a single or limited number of products/services and by communicating the same set of messages to all. People have varied requirements, interests, preferences and objectives; hence, the companies need to chose different approaches to cater to the different types of customers, taking into account their traits and attributes.

There are primarily four ways in which the market may be segmented. These are:

1. Demographically: Companies segment customers on the basis of their age, race, gender, nationality, religion, income, occupation, social class and family status. This is the easiest form of segmentation that is adopted by companies.

2. Geographically: The locality or place of residence often affect the interests and purchasing behavior of people. Companies perform geographic segmentation by grouping customers on the basis of population density, location or size of a locality or climatic conditions etc.

3. Behavioral: In this type of segmentation, the behavior of individuals towards products or services is comprehended. Customer behavior is affected by the benefits they are seeking in a product, their loyalty towards a brand, the frequency with which they use the products and their readiness to purchase those products.

4. Psychographic: Markets are also segmented based on the lifestyle chosen and adopted by the people. A company can segment its customers on the basis of their interests, attitudes, opinions and beliefs.

Market segmentation offers numerous benefits to companies and marketers. It enables entities to focus their resources and efforts towards a small well defined group of audience to communicate their message more effectively and achieve their business objectives in a better way.

Segmentation works as a tool for developing stronger and effective marketing messages for the companies. Rather than communicating with a large number of audience using vague and ambiguous messages, market segmentation makes it easy to use direct and specific marketing messages to talk about the needs, preferences and attributes of a certain group of audience.

Among numerous marketing tactics available, market segmentation guides in choosing and applying the best ones to attract customers and enjoying the best results for the efforts put. The use of right marketing tactics is crucial or the marketing outcomes will not be satisfactory and the efforts may go wasted.

Market segmentation helps companies enhance their marketing strategies. By having a deeper study of a focused segment, it helps in analyzing and bringing improvements in products and services to make them more appealing to customers that fall within the segment. Further, it can have an impact on new stages of product development; for instance, it allows companies to incorporate premium features to their products to attract upper class people living with higher income levels and willing to spend more.

Today’s digital marketing technologies often facilitate marketers to target people on the basis of their countries, cities, age, gender, level of education and general interests exhibited by the audience etc. Market segmentation when used in conjunction with such digital ad service technologies enhance companies’ efficiency in creating and targeting their digital ads.

Once, the business has performed its market segmentation process, it is ready to move on to create a target market to offer and promote its products, services and solutions.

Target marketing

After a company has segmented its market, it identifies and choses a segment to serve by offering its products and services. This is the process of target marketing. Companies try to adopt their best marketing tactics and plans according to the needs, wants, tastes and preferences of potential customers belonging to the selected group or segment.

Targeting of a market segment highly depends on its attractiveness in terms of segment size, segment profitability, level of competition in the segment, type of product or service being offered to the customers and the company’s overall ability and resources to serve the segment.

Once the company has correctly determined a segment to serve, it develops its value proposition and communicates the same to customers though ad campaigns, product design and sample distributions etc. Value proposition may be defined as the value in terms of benefits that a company promises to deliver through its products or services. A car  manufacturing company, for example, can market its cars as “fuel efficient and still powerful” to create value for customers who are more price sensitive.

To receive a warm response from segmented customers, it is crucial to communicate the understandable and right type of advertising messages through effective mediums. In this regard, companies can adopt an integrated marketing communication (IMC) strategy to deliver consistent messages aligned with the company’s key objectives.

Difference between marketing segmentation and target marketing

The four points of difference between market segmentation and target marketing are listed below:

1. Meaning

Market segmentation refers to the process of dividing the overall market into groups, based on various features, e.g., demographic, behavioral, psychographic, geographic, etc. Target marketing, on the other hand, is the subsequent process of identifying the appropriate market segment to promote and offer products/services.

2. Order of occurrence

Market segmentation takes place before target marketing, i.e. a company first segments the market into different groups, each of which has individuals with similar traits, characteristics, requirements, interests, etc. Target marketing is then carried out to identify the market that is going to be targeted by the organization for marketing its products or services.

3. Purpose

The objective of market segmentation is the division of market into different groups and determine the relevant customer group to target their products. Target marketing involves the development of appropriate marketing strategies in accordance with the preferences of already defined market segment the company is aiming to target.

4. Involves

Market segmentation involves the entire market that is to be divided into groups based on similar characteristics. In contrast, target marketing involves a more defined specific group of individuals at micro level (i.e. the chosen market segment) to whom the products will be marketed and sold.

Market segmentation vs target marketing – tabular comparison

A tabular comparison of market segmentation and target marketing is presented below:

Market segmentation vs Target marketing
Meanings
Dividing the overall market into separate groups with homogeneous characteristics Targeting a particular group or segment of customers to market and sell products/services
Occurrence
Occurs first Takes place after market has been segmented
Purpose
Determines the relevant group of customers to target their products/services Create suitable marketing strategies in accordance with the preferences of the market segments
Involves
The whole market to be divided into groups Specific group of customers

Conclusion – market segmentation vs target marketing

Market segmentation and targeting are two consecutive phases of marketing strategy. The former is focused on dividing the total market into customer groups known as segments whereas the later involves in determining a group or segment that the company is able and want to serve by communicating its massages and offering its products, services and solutions.

The selection of right market segment is important. If a company selects a wrong segment, it would waste its resources and the marketing efforts are likely to go in vain. The business objectives would, thus, not be achieved. Moreover, choosing one market segment means leaving others. Possibly the segments that a company has excluded may give it more sales than the one it has selected. Be aware of such potential drawbacks while focusing on target marketing and be ready to modify your marketing tactics if you find that your resources and efforts are not performing well to gain the customers’ response in a particular segment.