Market segmentation is the sub- dividing of market into homogeneous sub section of customers, where any sub section may conceivable be selected as a market target to be reached with a distinct market mix. The marketer has to identify his targeted customers (segments). For example, a motorcycle manufacturing company has to identify their market segments, like female officers, teenage college students, and middle aged customers. After identifying the segments the marketer (manufacturer) has to understand their tastes and expectations. In the case of female customers, they need not use much power full vehicles, like that the teenagers demand most powerful and stylish vehicles and the middle aged customers need vehicles having more mileage.
Benefits of market segmentation
No one can satisfy all people all time, can satisfy some people all the time or all people for some time. This concept is reflected in market segmentation
1. Facilitates proper choice of target market
2. Helps distinguish one customer group from another within a given market
3. Facilitates effective tapping of the market, adapting the offer to the target
4. The “divide and rule” concept as a strategy of dividing markets for conquering them
5. Helps crystallize the needs of the target buyers and bring out more predictable responses from them, helps develop marketing programs on a more predictable base, helps develop marketing offers that are most suited to each group.
6. Helps specialization required in products/services, distribution, promotion and pricing for matching the customer group and developing marketing offers and appeals that match the needs of such groups.
7. Makes marketing effort more efficient and economic, helps to identify less satisfied segments and concentrate on them to improve level of satisfaction.
8. Helps to concentrate efforts on the most production and profitable segments instead of frittering them away over irrelevant or unproductive or unprofitable segments.
9. Brings benefits to the customer as well, in various ways.
10. When segmentation attains high sophistication, customers and companies can choose each other and stay together.
