Understanding Market Segmentation
A market segment consists of people or organizations sharing with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function.
Market segmentation is based upon the assumption that markets of all commodities are heterogeneous. Two groups of people are never common in all characteristics and all products seldom succeed by appealing to everybody. The marketers with clear marketing communications target the identified homogenous segments.
“Marketing Guru Philip Kotler defines market segmentation as the subdivision of a market into homogenous subsets of customers where any subject may conceivably be selected on a market target to be reached with a distinct marketing mix.”
Market segmentation helps the marketing decision in following ways:
- By helping the marketer to identify the groups of customers to whom he can more effectively target marketing efforts.
- By helping the marketer to avoid trial and error methods of strategy formulation.
- By helping the marketer in addressing the customer needs and satisfying them.
- By providing important data to the marketer on which long term plans can be formulated.
- By helping, the marketers to stay focused rather than scattering their marketing resources.
Features of a Market Segment:
- The market segment must be internally homogenous because consumers within the segment would be more similar to each other in characteristics.
- The market segment must be identifiable so that the individuals can be placed within or outside the segment.
- The market segment must be accessible to that it can be reached by an advertising media and distribution channels
- The market segment must represent an effective demand.