The 5 Levels of Market Segmentation (Explained)

Market Segmentation Levels

Complying with the market segmentation, a marketer can sub-group a large market to make his marketing efforts more approachable and impactful. There are different levels of market segmentation, and each of them holds a certain uniqueness that a marketer needs to be serious about while producing, promoting, or distributing products/services to target customers.

The primary levels of market segmentation are:

  • Mass marketing
  • Segment marketing
  • Niche marketing
  • Local marketing
  • Individual marketing

Mass Marketing

Mass marketing is the marketing of one single product through one strategy to the entire market. Mass marketing believes that in the market there are most people have similar kinds of characteristics, behavior, and consumption patterns. It does not differentiate the whole market based on any factors such as consumer’s taste, need, preference, age, sex, etc. thus, it is also called undifferentiated marketing.

Mass marketing involves the mass level of activities such as mass production, distribution, and promotion of one product to all potential buyers. The firm that adopts the mass marketing level of market segmentation, if the firm operates at the national level – will target all potential buyers of the country. And, if the firm operates at an international level – it may target all the countries of the planet by considering its capacities.

Mass marketing helps firms to get economies of scale, get larger markets, more sales, and more profit but it also creates a high level of competition.

Read More: Production Concept

Segment Marketing

Another one of the important levels of market segmentation is segment marketing. As its name suggests, segment marketing divides the whole market into various segments based on some factors such as customers’ consumption patterns, purchasing power & spending patterns, geography, social values, etc. As segment marketing differentiates the entire market into many segments, it is also known as differentiated marketing.

The best and foremost attractive benefit of segment marketing is, that it enables marketers to understand the actual problems of each segment and respond in the best possible way. The big companies having different types of products usually focus on doing segment marketing. For example, a car company differentiates its cars as low-cost cars, luxurious driving experiences, performance-based, etc.

By reaching each of the markets, the firm can make more sales, satisfy each of the targeted segments, and of course, increase the profit amount. However, for each market segment, the firm needs to adopt a separate marketing strategy which may be difficult to do by all firms.

Niche Marketing

Niche marketing is the highly specialized level of market segmentation, where the marketer only focuses on specific customers, and their distinct need, want, and characteristics. The firm concentrates only on a specific market segment, thus it is also called concentrated marketing.

An example of niche marketing may be a sports car company, where the company only focus on the need and requirements of sports personalities. It does not concentrate on other aspects such as family needs, price, etc. Similarly, the site you are reading has its niche as education/reference.

A niche is a closely defined group that seeks a distinctive mix of benefits. In niche marketing, the marketer caters to a very specific market segment that requires high-quality service and attention. In this case, customers may have specific types of needs, they may require some special types of services, and they become ready to pay a premium price for the product. So the marketer needs to develop specialized knowledge and better services.

Read More: 6 Steps of Market Segmentation Process

Local Marketing

The local marketing level of market segmentation may the easier to understand than other levels. It simply is the marketing in local markets or areas. Where the locally produced products are marketed in the same area. For example, a farmer markets and sells his vegetables to his neighborhood, his community people, and other persons in his village.

The marketer may target his neighborhoods, local consumer groups, his village people & nearby villages, local markets, small regions, or even specific stores. The product features may consist of local appeals, organic, local flavor, local usage, etc.

The market size in local marketing is very small. The production and distribution costs may be high for the local marketer due to low production, however, there is very low competition and there is a restriction for the competitors to enter such local market.

Individual Marketing

Individual marketing is also very easy to understand like local marketing. In individual marketing, the marketer focuses on satisfying the need and want of a single customer. It is a micro-marketing strategy, also referred to as one-to-one marketing and customized marketing. Where a targeted customer is offered a customized service.

It is like direct marketing, where the marketer individually visits, communicates, and offers his services to the target customer, or also by personalized messages. Mostly, this marketing is used in B2B marketing where more attention is given to marketing products.

To market a person, the marketer may focus on the customer’s profile, sentiments, buying behavior, personal need, want hobby, location, etc. The marketer may be involved in individual marketing because the targeted customer is rich and has more spending habits.

Read Next: Organizational Buying Behavior

3 thoughts on “The 5 Levels of Market Segmentation (Explained)”

Leave a Comment