What Is Market Segmentation ?
Market segmentation is known as a customer oriented philosophy that seeks to identify need and want clusters in the market and develop marketing mix and program to satisfy those needs and wants. It is the basic tool for the implementation of the marketing concept. The marketing organization gains advantages in the market place through identification of the profitable markets, market specialization, and effective use of marketing resources and efficient monitoring of the market.
Advantages Of Market Segmentation
Some notable benefits or advantages of market segmentation can be described as follows:
Some notable benefits or advantages of market segmentation can be described as follows:
1. Identification Of Profitable Markets
Market segmentation is the process of dividing the total market into smaller market segments based on certain criteria. When the total market is divided into smaller micro markets the organization can accurately evaluate the size, growth and profit potential of the market segments. The organization can evaluate the competitive forces, such as the nature and extent of competition, and select to operate in the most profitable segment or segments.
2.Specialize On A Market Segment
Market specialization is only possible through segmentation. Market segmentation helps the organization to develop specialization in the micro markets. When an organization choose to operate in micro markets it can develop a better understanding of the marketplace. Segmentation leads the organization to offer appropriate product varieties, set right prices, develop effective promotion programs, and select the efficient distribution channels. Once such a specialization is achieved, the organization can deal more effectively with competitive forces in the micro markets.
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3. Effectively Use Marketing Resources
Through market segmentation, the organization can use its marketing resources to the most promising markets. The organization can correctly evaluate the sales, costs and profits of various segments. This helps the organization to correctly identify the type of marketing effort needed by various market segments. The organization can withdraw from unprofitable segments and use its resources to the profitable segments. This results in better allocation of marketing resources.,
4. Monitor Changes In The Market Place
Another advantage of market segmentation is that it helps the organization to efficiently monitor the changes taking place in the market place. The market place is not only dynamic in terms of buyer taste and preferences but also in terms of competition. When an organization operates in micro markets it can efficiently monitor such changes, take swift corrective action and its marketing mix to the changed situation.
5. Adapt Marketing Strategies
The marketing firm can design appropriate strategies related to its marketing mix for a market segment. The marketing strategies can also be changed according to the changes taking place in the market segment.
6. Effectively Focus On Competitors
Segmentation helps the marketing firm to easily identify its competitors in a market segment; evaluate their relative strengths, and understand their strategies more accurately. This will prepare the firm to effectively deal with its competitors.