Effective market segmentation can be achieved only when the market has heterogeneous needs and characteristics, the need and characteristics are measurable, the market is accessible to the marketer, and it is large enough to be profitable.
Requirements For Effective Market Segmentation
1. Heterogeneous Needs And Characteristics
Segmentation of a market is meaningful only when significant difference exists in buyers' product needs. Segmentation also requires difference in buyers' characteristics, particularly relating to buying power and behavior. Difference in product needs and buyer characteristics help the organization to divide the total market into smaller market segments.
2. Measurable
For effective market segmentation, information on buyers' needs and characteristics should be obtainable and measurable. If the segmentation is based on the common variables, such as age, sex, income level or life-style the organization can obtain such information from the market. However, of segmentation is based on the desire of female buyers to look young and beautiful, such information may be difficult to obtain and measure.
3. Accessibility
The market segment should be accessible through the existing marketing institutions, such as distribution channels, advertising media and the sales force. Market segmentation has no value if the organization can not find middlemen to distribute the organization's product in a particular segment, and if communication to the buyers in the segment is not possible.
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4. Profitability
The market segment should be large enough to give the organization adequate profit. This is the reason for adopting target marketing instead of individual marketing. Individual marketing provides opportunity to perfectly match the product-service offer to the specific needs of the buyer. If each individual purchase is of very large unit value, then the organization may find the market segment profitable enough to the approached with separate marketing mix. this may be the case in marketing of such products as the aircraft or the hydro-electric turbine. For many of the consumer products, individual marketing is highly expensive and not profitable for many large organizations.
