What is Market Segmentation?
Market segmentation is defined as "the process of taking the total, heterogeneous market for a product and dividing it into several sub-markets or segments, each of which tends to be homogeneous in all significance.
The markets could be segmented in different ways. For instance, instead of mentioning a single market for 'shoes', it may be segmented into several sub-markets, e.g., shoes for executives, doctors college students etc.
Geographical segmentation on the very similar lines is also possible for certain products.
Requirements for Markets Segmentation
For market segmentation to become effective and result oriented, the following principles are to be observed:
- Measurability of segments,
- Accessibility of the segments, and
- Represent ability of the segments.
The main purpose of market segmentation is to measure the changing behaviour patterns of consumers. It should also be remembered that variation in consumer behavior are both numerous and complex.
Therefore, the segments should be capable of giving accurate measurements. But this is often a difficult task and the segments are to be under constant review.
The second condition, accessibility, is comparatively easier because of distribution, advertising media, salesmen, etc. Newspaper and magazines also offer some help in this direction. For examples, there are magazines meant exclusively for the youth, for the professional people, etc.
The third condition in the represent ability of each segment. The segments should be large and profitable enough to be considered as separate markets. Such segments must have individuality of their own. The segment is usually small in case of industrial markets and comparatively larger in respect of consumer products.
Benefits of Segmentation
The manufacturer is in a better position to find out and compare the marketing potentialities of his products. He is able to judge product acceptance or to assess the resistance to his
- The result obtained from market segmentation is an indicator to adjust the production, using man, materials and other resources in the most profitable manner. In other words, the organization can allocate and appropriate its efforts in a most useful
- Change required may be studied and implemented without losing markets. As such, as product line could be diversified or even discontinued.
- It helps in determining the kinds of promotional devices that are more effective and also their
- Appropriate timing for the introduction of new products, advertising etc., could be easily