MARKET SEGMENTATION

Market Segmentation



Market Segmentation

Introduction

A market comprises of individuals and organizations that are in need, and they have money to spend for their wanted desire. However, in most of the markets needs and desires of the buyers are not same they vary from person to person.

Corporations and their marketing managers must deepen the knowledge about the market in order to adapt its offering and its strategy of marketing to the requirements of individuals and groups collectively. How can the company accommodate in such diversity? The segmentation is considered as a starting point after recognition that the market is heterogeneous and is needed to be divided into groups or homogeneous segments. This can be chosen as a target market for the company. Thus, segmentation involves a process of differentiation within a market needs. In today's fast growing world, it is vital for all marketers to segment their markets (Nilson 2003, p. 39).

The reason is that the markets are crowded with customers with varying needs and desires. Therefore, the traditional concept of mass marketing is losing its significance and diverse target market segmentation is being practiced across the globe. It is done to cater more customers and to enjoy a competitive advantage in the complex markets.

Concept and Definition of Market Segmentation

The market segmentation is a process that involves the division of the total market in several smaller internally homogeneous groups that are to be targeted by the organization. The essence of segmentation is to attract the consumers that are aware about the product or service. One of the key elements of a successful company is its ability to target properly in the potential market. Segmentation is also an effort to improve the accuracy of marketing in a business. It is a process of aggregation pertaining to the group in a niche market and related to people with similar needs.

The market segment is a group of relatively large and homogeneous consumers that can be identified within a market; these are the individuals that have desires to purchase. The target markets are selected according to the geographic location, consumer attitudes, purchase behavior or similar buying habits. This procedure is somewhat similar to the marketing mix (Kotler 2006, p. 150).

Importance of Market Segmentation

The behavior of consumers is often too complex to explain in one or two characteristics that should be taken into account. There are several dimensions starting from the needs of consumers that are to be explored by the organizations.

A reliable segmentation should result in construction of different subgroups or market segments with the following characteristics:

Intrinsically homogeneous (similar) consumer segment would be favorable for the organization based on consumer's likely responses to the variables of the marketing mix and segmentation dimensions (Smith 2002, p. 3).

Heterogeneous consumers in more than a few segments should be clearly differentiated; this categorization should be based on their likely response to the variables of the marketing mix.

According to the Philip Kotler, the Marketing guru, effective market segmentation strategies are:

Measurable: It means that the selected target market must be measurable ...