The Importance of Market Segmentation

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Table of Contents

Introduction
Advantages and disadvantages of segmentation
Linking segmentation and other marketing mix elements
Conclusion
References

Introduction

Market segmentation is a method that is used to manage a larger market. It involves the division of the larger market into smaller subsets. These subsets have an internal homogeneity where the buyers within them have common needs for goods and services. They also show the same buying behaviour. Buyers in different subsets exhibit different needs and therefore it can be concluded that these subsets have an external homogeneity (Hutt & Thomas, 2002).

Different criteria can be used to divide the market into subsets. These may include geographic boundaries, demographic divisions or even psychographic profiles. The segments that are developed should be viable in such a way that they result in the profitability of an organization. They should also be accessible and measurable such that data can be obtained from them easily for analysis. This will ensure that their profitability is checked progressively.

Advantages and disadvantages of segmentation

When a company uses segmentation, it is bound to experience both its advantages and disadvantages. One of its advantages is that the needs of the customers are matched well. This is because segmentation may result in the division of the market according to the needs of the buyers. This will ensure that the needs of each subset are identified and therefore met in the best possible way. Another advantage is that it may also result in retaining more customers. Customers are dynamic in the way they interact with the market. The different subsets ensure that if such changes occur, the needs of a customer are still met by a different subset. This will ensure that the customers do not switch to other products (Malcolm & Ian, 2004). Segmentation also allows the company to know how it is viewed by its customers. This is important since it will enable the business to make changes where necessary to be able to satisfy its customers more. Another advantage is that it offers a platform for growth. When segmentation is carried out effectively, it increases sales and this will result in the growth of the company.

The disadvantages that are associated with segmentation include neglecting other segments in the market. This may be a result of concentrating on a particular segment. This results in the competitors taking advantage of the isolated segments and therefore losses for the company (Robert, 2006). Another disadvantage comes when the market is over segmented. This is by having very small segments such that they cannot be assessed in terms of their profitability to the company. This may also result in losses being incurred by the company.

Linking segmentation and other marketing mix elements

Segmentation can easily be linked with other marketing mix elements such as promotional activities. This is because the needs of the segments are identified beforehand. For example, if a segment consists of customers of a given age group, the advertisements that will be done within this particular segment will take into account their age. This ensures that the intended message is received and understood well and results in making the marketing of the products effective and easy. The intended message is also delivered to the intended recipients.

Conclusion

Segmentation is therefore important since when it is well carried out it results in the profitability of the company. It is seen that its disadvantages come about as a result of poor segmentation and not from its shortcomings. Therefore, it is advisable as part of the marketing structure to include segmentation as it will improve the profitability of the company. Its implementation should also be done carefully to ensure that the company does not suffer the shortcomings of poor segmentation.

References

Hutt, M. D., & Thomas, W. S. (2002). Business Marketing Management. Ohio: South-Western.
Malcolm, M., & Ian, D. (2004). Market Segmentation. London: MacMillian.
Robert, W. B. (2006). The White Paper Marketing Handbook. Ohio: Thompson.

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The Importance of Market Segmentation

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