During my work in one of the companies long time ago, I noticed continuous fighting rounds between designers and marketing experts. While the designers see the marketing guys limiting their creativity, the marketing guys see the designers lack to understand the project requirement.
This is one of the common problems that occur especially in companies that do not involve a large team discussion prior to the product development. The product here takes a broader approach in the design industry from product design to interaction application design.
Another face for the problem is limiting the rule of the creative designers into the creative room, which is reflected on their minds and way to think. Both designers and marketing experts should work closely through the project development process, and this requires the designers to understand the target consumer and wither the product is targeting single type of users or multiple type, which is known as market segmentation.
What is Market Segmentation?
The market segmentation is the process to divide the large market into smaller and clearly identified segments or groups having similar needs, demands and characteristics. The target is to create marketing mix that focus on this specific consumer segment.
The marketing segment has four basic strategies to segment the market, which are the behavior of the consumer, the demographic, psychographic and geographic differences. Applying any of these strategies helps dividing the market to smaller segments, which subsequently helps the designer to focus on specific type of the end consumers.
One of the commonly used strategies to define the market segment is the demographic information, which divides the large market into smaller groups based on the race, age, gender, education, occupation, marital status and income. For example, one company may produce two different products; the first one is after shave foam, which by default use the male segment, while the other is feminine hygiene product that will target the female segment.
Types of Market Segmentation
You may notice that there are companies that focus on one product targeting single marketing segment, while others are having multiple products targeting different segments, there are advantages and disadvantages for both types.
Single market segment
The single market segmentation or the concentrated strategy is the most focusing plan as it pinpoints only one segment based on the above mentioned strategies. One of the examples of this strategy is ROLEX luxury watch brand that focuses only on the rich consumers who can afford its price.The concentrated strategy has advantages such as:
- Specialization in one product
- Put all the efforts together for the satisfaction of one consumer groups
- Limits the resources as all the facilities are focusing on one segment
However, the concentrated segmentation includes risks such as the following:
- Increased risk of working in only one segment
- Any shift in the consumer interest can affect the brand enormously
- The company may fact troubles in expanding the business markets
Unlike the single market segment, the multi-segmentation focuses on more than one consumer type expanding the based of the business to reduce risk. One of the examples of multi-segmentation Marriott International that provide different levels of residencies such as the Marriott Suites for the permanent vacationers, the Fairfield Inn for economy lodging and the Courtyard By Marriott for business travelers. The advantages of using this type are:
- The ability to shift production capacities between products
- Extend the market coverage
- Flexible pricing policy as each product can have its own price range
- Less risk as the company reply on different segments in the market
Yet, as we mentioned earlier, only few companies are able to achieve this variation during the following disadvantages:
- Requires greater investment and ability to manage complex production process
- Increased marketing cost to be able to sell products through different channels
- Requires careful understanding the market of each product to avoid confused marketing vision
Switching Between Segmentation Types
While the very quick review to the BMW Mini Cooper, it provides a clear example for the market segmentation as a variable factor in the marketing process rather than a fixed one. Enterprises can shift from concentrated segment strategy to multi-segment strategy based on number of factors including the expanding the consumer base and accessing new markets.
For long time, Mini Cooper was known as the cool British car for individual with special taste and high energy; mostly young consumers with the age range 20-30. It is also promoted in the British market as the historic iconic UK car for young energetic young consumer. These were not associated with any of the values in the United States market.
Although Mini was known as young energetic car, it has other market segment focus but these segments were no universal. Generally Mini Cooper segments the market based on two factors, the first one is based on the people emotions and the geographical location.
The designers must have very good understanding to the marketing segmentation strategy before the new product development (NPD) in order to build a product design that are functional and viable in the real market. it is also important to learn that the segment is not a fixed value through the company life, new products can be produced to open new segments, which turns the company strategy by default from concentrated segmentation to multi-segmentation strategy.
Additionally, expanding the business may lead to increasing the segmentation based on number of factors such as the emotional factors and geographical location. Both design and marketing teams should integrate together along with these changes in sustain a successful production process.