Marketing is vital for the development of every business enterprise. It allows the company to see the full and comprehensive picture of the market it tries to enter, study the competition’s conditions, supply, and demand, etc (Kotler & Keller, 2008). All these activities are united under the single name, ‘marketing’, which basically allows companies to be aware of the conditions of the market they want to compete in (Hague, 2009). The process of segmentation of the market is used by companies as a part of their marketing strategies (Daemon, 2009). The energy market demands segmentation as well. The energy market is a rather fast developing one in which new trends of segmentation are constantly observed.
Needless to say, to cope with the demands of the constantly developing markets, every company needs to update its segmentation policies and techniques from time to time (Daemon, 2009). The most recent trend, as reported for instance by Gruber (2008), in segmentation is the process of basing the latter on the so-called psychographic factors. In other words, besides monitoring the buying habits of the customers and the recent demand trends, companies should pay attention to the psychological peculiarities of their customers and consider their likes and dislikes, values systems, lifestyles, etc (Gruber, 2008). Thus, a greater focus on the psychology and individuality of each customer is the newest segmentation technique that will definitely determine the market conditions in the future.
The energy market is definitely one of the fastest developing market areas nowadays (Kotler & Keller, 2008). The current economic stagnation, instability of supply, and prices in the energy market all contribute to the need for special attention to the energy sector of the market. In Germany for instance, the newest trends in energy market segmentation are people-oriented, i. e. based on the psychological peculiarities of every customer. In Germany Sinus-Milieus approach, Geometrie, and Euro-Socio-Styles approach are used by the majority of companies (Gruber, 2008). These approaches allow companies like Eon, RWE, EnBW, and Vattenfall to monitor customers’ values and segment them into separate groups according to those values (Gruber, 2008).
With the help of the approaches mentioned above, the German energy market manages to segment the customer base of the country according to seven major principles that include price sensitivity, level of services, brand image, brand’s being environmentally friendly, innovations offered, absence of risks, and commitment to traditional energy providers (Gruber, 2008). Based on these criteria, German energy market players build their promotion campaigns and try to attract new customers using the mistakes of the competitors (Gruber, 2008). For instance, if Eon increases prices, RWE might offer lower ones and claim its care about the environment to attract those unsatisfied with Eon to its customer base (Gruber, 2008). However, this works rather seldom as a commitment to tradition seems to be the basic segmentation criterion for the German energy market (Gruber, 2008).
Drawing from the aforesaid considerations, the energy market is one of the fastest developing areas of the market in the world nowadays. Like any other market area, the energy market demands modern segmentation techniques to allow companies operating in it to compete and offer services of the highest quality. Segmentation of the energy market based on psychological peculiarities of customers, their values, and lifestyles is the segmentation technique that promises to become dominant in the future of marketing segmentation.
Reference List
- Daemon 2009, Energy: Market Segmentation. Daemon Quest.
- Gruber, A 2008, Trend-setting Market Segmentation – A New Wave in the German Energy Market. Article Alley.
- Hague, P 2009, Marketing Segmentation. B2B.
- Kotler, P. & Keller, K 2008, Marketing Management. Pearson/Prentice Hall.