Editing Market segmentation (section)

== Market segmentation strategy ==
{{See also|Niche market|Porter's generic strategies}}

A key consideration for marketers is whether they should segment. Depending on company philosophy, resources, product type, or market characteristics, a business may develop an [[Mass marketing|undifferentiated approach]] or ''differentiated approach''. In an undifferentiated approach, the marketer ignores segmentation and develops a product that meets the needs of the largest number of buyers.<ref name="business dict undifferentiated">{{cite web|work=Business Dictionary |url= http://www.businessdictionary.com/definition/undifferentiated-marketing.html |title=undifferentiated marketing |archive-url= https://web.archive.org/web/20200923234210/http://www.businessdictionary.com/definition/undifferentiated-marketing.html |archive-date=23 September 2020 |access-date=3 June 2022}}</ref> In a differentiated approach, the firm targets one or more market segments and develops separate offers for each segment.<ref name="business dict undifferentiated" />

In consumer marketing, it is difficult to find examples of undifferentiated approaches. Even goods such as [[salt]] and [[sugar]], which were once treated as commodities, are now highly differentiated. Consumers can purchase a variety of salt products; cooking salt, table salt, sea salt, rock salt, kosher salt, mineral salt, herbal or vegetable salts, iodized salt, salt substitutes, and many more. Sugar also comes in many different types - [[cane sugar]], [[beet sugar]], [[raw sugar]], white [[refined sugar]], [[brown sugar]], [[caster sugar]], sugar lumps, icing sugar (also known as milled sugar), [[sugar syrup]], [[invert sugar]], and a plethora of sugar substitutes including ''smart sugar'' which is essentially a blend of pure sugar and a sugar substitute. Each of these product types is designed to meet the needs of specific market segments. Invert sugar and sugar syrups, for example, are marketed to food manufacturers where they are used in the production of conserves, chocolate, and baked goods. Sugars marketed to consumers appeal to different usage segments – refined sugar is primarily for use on the table, while caster sugar and icing sugar are primarily designed for use in home-baked goods.

{| class=" wiki table"
|+ Main Strategic Approaches to Segmentation<ref>Based on Weinstein, A., ''Market Segmentation Handbook: Strategic Targeting for Business and Technology Firms'', 3rd ed., Haworth Press, Binghamton, N.Y., 2004, p. 12</ref>
|-
! Number of segments
! Segmentation strategy
! Comments
|-
| Zero
| Undifferentiated strategy
| Mass marketing: no segmentation
|-
| One
| Focus strategy
| Niche marketing: focus efforts on a small, tightly defined target market
|-
| Two or more
| Differentiated strategy
| Multiple niches: focus efforts on 2 or more, tightly defined targets
|-
| Thousands
| Hypersegmentation
| One-to-one marketing: customize the offer for each customer
|}

Many factors are likely to affect a company's segmentation strategy:<ref>{{cite web |last=Claessens |first=Maximilian |title=Market Targeting - Targeting Market Segments effectively |url= https://marketing-insider.eu/marketing-explained/part-i-defining-marketing-and-the-marketing-process/market-targeting/ |website=marketing-insider.eu |access-date=17 October 2020}}</ref>

* Company resources: When resources are restricted, a concentrated strategy may be more effective.
* Product variability: For highly uniform products (such as sugar or steel) undifferentiated marketing may be more appropriate. For products that can be differentiated, (such as cars) then either a differentiated or concentrated approach is indicated.
* Product life cycle: For new products, one version may be used at the launch stage, but this may be expanded to a more segmented approach over time. As more competitors enter the market, it may be necessary to differentiate.
* Market characteristics: When all buyers have similar tastes or are unwilling to pay a premium for different quality, then undifferentiated marketing is indicated.
* Competitive activity: When competitors apply differentiated or concentrated market segmentation, using undifferentiated marketing may prove to be fatal. A company should consider whether it can use a different market segmentation approach