My understanding has always been that any business strategy, that is based on using the division the division of a market into different groups with diferent demographics or market behavior, and then using that behavior to increase profitibality, is a "market segmentation strategy"
While such strategies OFTEN involve differential pricing, and sometimes, different SKU's, they need not.
For example, lets take a hypothetical product X. X sells to two market segments, lets call them segment A and segment B. Segment A consists of individuals who have an intense preference for this product. Segment B has a slight preference, at current prices (lets assume that for other strategic reasons the price is fixed, and is the same for all segments) Segment B is most inclined to purchase at a certain portion of the year, in particular the holiday shopping season. Lets assume that the company that make X is constrained in its supply of X. They CANNOT procure enough X to meet all demand (at the current price) between September 1 and Dec 31 of the current year.
They believe that members of segment B, if they cannot find the product, will be lost sales. Members of segment A, will purchase the product in January or later, when demand falls below the available levels of product. Therefore, to minimize lost sales, they limit product on the market in September and October, in order to have more available during the holidays.
Im NOT asking if this happens wrt to a particular product, or if it is a wise strategy.
I am only asking if this strategy would be considered a market segmentation strategy.
Thanks in advance.
While such strategies OFTEN involve differential pricing, and sometimes, different SKU's, they need not.
For example, lets take a hypothetical product X. X sells to two market segments, lets call them segment A and segment B. Segment A consists of individuals who have an intense preference for this product. Segment B has a slight preference, at current prices (lets assume that for other strategic reasons the price is fixed, and is the same for all segments) Segment B is most inclined to purchase at a certain portion of the year, in particular the holiday shopping season. Lets assume that the company that make X is constrained in its supply of X. They CANNOT procure enough X to meet all demand (at the current price) between September 1 and Dec 31 of the current year.
They believe that members of segment B, if they cannot find the product, will be lost sales. Members of segment A, will purchase the product in January or later, when demand falls below the available levels of product. Therefore, to minimize lost sales, they limit product on the market in September and October, in order to have more available during the holidays.
Im NOT asking if this happens wrt to a particular product, or if it is a wise strategy.
I am only asking if this strategy would be considered a market segmentation strategy.
Thanks in advance.
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