What is Market Segment?
A market segment refers to the group of people who share one or more common traits, put together for some marketing purposes. Every market segment is unique in itself and the marketers make use of different criteria to form a target market for their product or service. The marketing professionals approach every segment in a different manner, after completely understanding and knowing the needs, lifestyles, and personality of the target customer.
What is Market Segmentation?
Market segmentation refers to the process of dividing a market of potential customers into various groups and segments, based on various characteristics. The segments created are formed of consumers that respond similarly to the marketing approaches that means the ones that share the same interests and needs.
Why is Market Segmentation important for the marketers?
It becomes easy for marketers to personalize their marketing campaigns with the help of market segmentation.
By segmenting the like groups of potential customers rather than aiming individually, the marketers can be more efficient with time, money and other important resources than if they target customers at an individual level. By grouping similar consumers together, marketers are able to target specific audiences in a cost-effective manner.
Marketing segmentation helps in reducing the risk of an unsuccessful or ineffective marketing campaign. At the time of dividing the market on the basis of the key characteristics and personalizing their approaches based on that information, there are chances that it will lead to success.
Segmentation can also be used by the marketers to prioritize their target audiences. If segmentation shows that some consumers would be more likely to buy a product than others, the allocation of attention and resources becomes better.
Objectives of Market Segmentation
The objectives of market segmentation link to “why” of the segmentation. The following points reflect the answer to the question: “Why is Market Segmentation Necessary?”.
- Understand and Tackle Heterogeneous Market
The market will surely have customers. The customers reveal a high degree of heterogeneity and further differ on the basis of needs, wants, and preferences. Market Segmentation uses dissimilar bases to examine the heterogeneity. Market Segmentation helps in enhancing the knowledge of the knowledge of the marketers and further understanding the realities.
- Define and Select the Target Market
Segmentation of the market improves a company’s understanding of why the customers do or do not buy certain products or services. Marketer clearly gets to know about his customers as he is the one who knows the market adequately.
- Justify Modern Marketing Theory and Practice
The approach of market segmentation efficiently fits with the modern marketing philosophy. Market segmentation approach is the only option left for the marketers who want to satisfy his valued customers. It is considered to be an essential condition for the successful modern marketing practice.
- Identification of the Marketing Opportunities
With the help of target marketing, the marketers help in identifying marketing opportunities in a better way. This helps in developing the right offer for each of the target market in an efficient and effective manner.
- Formulate Effective Marketing Programs
With the help of market segmentation, a marketer gets the opportunity to divide the market among distinct groups. This helps the marketer in developing a clear understanding of what the customer wants and needs. Market segmentation helps the marketer to formulate a suitable marketing mix for the selected segments. Product, pricing, promotion and distribution approaches can be designed successfully. This is only possible by market segmentation.
- Take the Advantage of Specialization
Market segmentation makes it easier for marketing efforts to be directed in a clear and specific way. The marketing program is designed by the company for various groups and for various buyers. Specialization in the production and marketing offers a lot of advantages to the company.
- Obtain Positive Response for the Customers
A company helps in satisfying its valued customers only if it follows market segmentation theory. It focuses on the resources and efforts only of the selected segments. Surely, it can solicit a positive response from the customers.
- Improve Profitability
The products are manufactured on the basis of the needs of a specific group of buyers. The company helps in attracting distinct groups of buyers and increasing sales. Increase in sales will surely have a positive impact on the profitability of the company.
- Accumulate Valuable Information
Every marketing decision depends upon the accessibility and quality of the information. The process of market segmentation helps in generating necessary information. This information can be used to formulate realistic or fact-based marketing strategies.
- Ensure Effective Utilization of Resources
Market Segmentation helps the company to understand the market needs and wants. The company helps in the identification of attractive business opportunities. Limited resources are utilized to exploit business opportunities. This further minimizes the misuse of resources.