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Levels of Market Segmentation – Principles of Marketing

Levels of Market Segmentation
Market Segmentation | Principles of Marketing
Management Notes

Market Segmentation

Market segmentation is a marketing strategy which involves dividing a broad target market into subsets of consumers, businesses, or countries that have, or are perceived to have, common needs, interests, and priorities, and then designing and implementing strategies to target them.

Market segmentation strategies are generally used to identify and further define the target customers, and provide supporting data for marketing plan elements such as positioning to achieve certain marketing plan objectives. Businesses may develop product differentiation strategies, or an undifferentiated approach, involving specific products or product lines depending on the specific demand and attributes of the target segment.

Levels of Market Segmentation

Mass Marketing

In mass marketing level of market segmentation, the seller offers the same product for all the buyers with different needs. Here, seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers. In mass marketing, the size of the market will be larger and the promotion and advertising expenses become generic to attract the entire customers.

It may lead to lower cost of production and higher profit margin due to mass production and distribution. However, it may result in high competition.
For example, mass marketing would be toothpaste, detergent, mosquito, coil, etc.

Segment Marketing

In segment marketing, a marketer divides a total market into several segments based on consumers’ buying behavior, purchasing power, demographic factors socio-cultural factor, etc. Segment marketing connects the customer with the marketer in the best possible way.

Many marketers use a different type of segment marketing to market their entire lists of products. For example, the car market can be segmented into:

  • Low-cost basic transport
  • Luxurious driving experience
  • Performance-based, etc.

Niche Marketing

In Niche marketing, the customers are rich and require high-end service. As competition is not that stiff, a marketer can quote premium price. The main requirements of Niche marketing segmentation are listed as follows:

  • Customers may have a specific type of need.
  • Customers may require a special type of services.
  • The marketer needs more skill and specialized knowledge.

For example, insurance policy for football players.

Local Marketing

In local marketing level of segmentation, the focus is on the local market. The marketing program is on the local market. The marketing program is designed as per the need of local consumer group, cities, neighborhood and even specific stores. In that reference, the focus is on local appeals, local flavor, local usage, etc.

Here, the cost of production and promotion of goods may be high due to low production but competition will also be less since the marketers of other regions may not enter into the local market.
For example, locally manufactured foods and products being targeted to the main area.

Individual Marketing

Individual marketing focuses on satisfying the needs and wants of the individual prospective customer. Individual marketing is also known as one-to-one marketing or customized marketing and micromarketing. It’s the segmentation level where the seller offers a customized product to the consumer. It is almost like direct marketing where the marketers target the individual customers through direct communication channels or salespeople.

This is mostly used in business-to-business where more attention is given to market the product or service. It may require product demonstration to the individual customers and home services and installation.


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The Segmentation process begins by grouping

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