7 Main Types of Market Segmentation Strategies – Explained!

If separate products and programmes are designed for different segments it is called ‘differentiated marketing.

2. Large Segment Strategy:

When a market is segmented and marketing resources are limited, the marketer may decide to pursue a large segment strategy. A mass market may be segmented say into three core segments. One of the segments, which is large enough and representing 50% or more of the market would be the centre of focus.

We may also call it as the Single-segment marketing. It means to concentrate organisation’s marketing efforts on a single segment. Unfortunately there are large risks associated with this strategy. Should the chosen segment cease to be viable the firm would also cease to operate.

Putting all the eggs into one basket can be hazardous. For example one-hour photo has lost to digital photo camera, fax servicing has lost to e-mail, pager has lost to mobile phones, and STD booths have lost due to cheaper telecom services. Single market segment strategy can also be called as ‘concentrated targeting strategy or ‘niche’ strategy.

3. Adjacent Segment Strategy:

When a single segment focus has reached the point of full market penetration and after a single-market segment successful, the marketer opts for adjacent marketing strategy, a closely related segment is tackled next. Suzuki entered the Indian market with the Maruti 800 at the low-price end of the market (presently Alto serves this segment).

As Maruti penetrated this segment, it moved to an adjacent segment in terms of price and quality by adding Maruti Zen. Next was entry into a large car segment with Maruti Esteem. Over the last 25 years, Suzuki effectively used an adjacent segment strategy and is a market leader in each segment.

4. Multi-Segment Strategy:

Market segmentation opens the door to multiple market-based strategies and greater marketing efficiency. For example in case of a power supplier, the segments may include domestic users, government users, commercial establishments, factories, occasional users, etc. The power supplier would serve all the segments at the same time. This strategy is known as multi-segmentation strategy.

All of them would require separate marketing mixes. Nike produces shoes for golfers, tennis players, basketball players, for cricketers, and thus serves many segments relating to sports shoes. Chicago-based Hyatt Hotels and Resorts has targeted the gay, lesbian, bisexual and transgender market to make its image more attractive to this market. This strategy is also called as ‘differentiated marketing strategy’.

5. Small Segment Strategy:

Although a market may provide three segment opportunities, a business with limited resources and capabilities may decide to compete only in the smallest segment. Such a small segment is normally ignored by large competitors, using mass market or large segment strategies.

Even businesses with multi-segment strategy may feel ineffective to focus on such a small segment. In the case of Mercedes, for a very long time it used a small segment strategy to focus on luxury car market. However, due to competitive pressures and attractiveness of adjacent segments, it is following a dual-segment strategy.

6. Niche Segment Strategy:

Separating a market into 100% homogeneous segments is really difficult. Many differences will always remain due to demographics or usage behaviour. Thus, there is always a possibility to carve a niche within a segment to customise marketing efforts according to group of target customers. Niche segment consists of sufficient number of customers seeking somewhat specialised benefits from a good or service. This strategy would avoid direct competition with larger firms who are pursuing bigger segments. This strategy is also known as ‘concentrated strategy’.

7. Sub-Segment Strategy:

If there are meaningful differences in customer needs within segments which are presently not being met by current market segmentation, then there is need for possible sub- segmentation. For example, a ready food kitchen may go in for segmentation within such segment. It may go for office delivery, food for standing on the ground floor, and customers sitting with air-conditioned atmosphere on the first floor. Food remains the same, but prices differ. We may call it as ‘micromarketing’.