Importance of Market Segmentation

Market segmentation is the process of grouping prospective buyers into groups or segments who have similar needs and respond similarly to marketing efforts. Using market segmentation, companies can differentiate their products and services in terms of how they are perceived by different categories of consumers. By determining which products are likely to earn a share of a target market and how to market and deliver those products, market segmentation helps businesses minimize risk.

In order to maximize profitability, companies should minimize risk and clarify the marketing and delivery of products. Segmenting the market allows a company to reach a wider demographic and discover products or services they hadn’t considered before.