Market Segmentation is the process of dividing market into different groups based on different features of the customers. Market segments are created based on demographics of customers, needs, preferences, psychological or behavior criteria of customers.
Benefits of market segmentation:
It is necessary to understand consumer behavior for proper market segmentation.
Consumers are those who consume a product, decide the quality of service or product as good or bad or average. The customer purchases a service or product. The same person can be customer and a consumer, but it is not always necessary.
Sellers sell several products to the customers, but it is the consumers who decide quality of the product. The role of the consumer becomes prominent for the sellers. The sellers must understand the way consumers decide quality of goods, products, services as good or bad; what features of the product entice consumers to feel the product is good or bad or what kind of products increase interest in the consumers and encourage them to purchase those products.
The attributes of consumers which contribute the purchase decision is consumer behavior. To understand consumer behavior, it is necessary to understand all the activities performed during the purchase process by individuals, groups, or organizations. Consumer behavior includes an understanding of consumers emotions, attitudes, preferences that affect buying behavior.
Demographics features, financial status, lifestyles, usage pattern, brand awareness, and many more features of the individuals, groups, or organizations are studied.
Influence of other consumers like friends, family members, trends, reference groups, sports, etc.
Predicting consumer behavior is a difficult task. But the transactions performed by the customers stored in the database has become an asset for the organizations in understanding consumer behavior to large extends.
Steps customers go through to finalize a purchase decision:
It is not necessary that the customers go through all of the above-mentioned steps, and it is not also necessary that they follow the steps linearly. Different people have different though process.