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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.
Some of the Major Importance of Market Segmentation are as follows:
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a) Enhances consumer-oriented marketing:
In order to achieve marketing objectives, market segmentation facilitates the creation of a marketing mix which is more targeted and useful. In comparison to a market-wide integrated approach, a segment-based approach is better and more effective.
b) Introduces a marketing mix that is suitable for your business:
Using market segmentation, producers can gain a deeper understanding of their consumers’ needs, their behavior, and their expectations. The information can be used for a specific purpose. Consumers and producers always benefit from decisions based on such information regarding Four Ps.
c) Introduces a product strategy that is effective:
Since market segmentation clarifies the specific needs of consumers in the target market, product development is in line with consumer needs. Products can be more effectively matched to consumer needs with the help of market segmentation. Marketing firms profit from this because consumers are satisfied and sales are higher.
d) Provides a means of identifying promising markets:
By segmenting the market, the firm can identify those submarkets where limited resources can be best applied. Segmentation allows firms to concentrate on the most productive / profitable segments of the market. By segmenting the market, the most appropriate market can be selected.
e) Allows for better marketing opportunities to be exploited:
In order to identify potential market opportunities, market segmentation is helpful. Within a given market, it helps the marketer distinguish between different types of customers. As a result, he is able to determine his target market. Identifying the exact target group at the beginning of the marketing process allows the marketer to utilize the available marketing resources effectively.
f) Provides assistance in selecting a suitable marketing program:
Segmenting the market allows a marketer to develop his marketing mix programme on a reliable basis as adequate information about the needs of consumers is available. In order to meet the buyers’ needs and expectations, marketing programs are designed according to their needs.
g) Ensures marketing efforts are directed in the right direction:
“Dividing the markets in order to conquer them” is a good description of market segmentation. Firms can segment their markets so that they avoid unprofitable and irrelevant markets and concentrate on certain segments that are promising. Market segmentation makes marketing efforts more focused on achieving marketing objectives because one direction is given to marketing efforts.
h) Makes advertising more effective:
By using only media that reach the segments, advertising media can be used more effectively. As a result, advertising becomes more result-oriented.
i) Provides special benefits to small firms:
Small businesses benefit from market segmentation. Due to their relative newness in the market, they have limited resources available to them. For better marketing performance, these companies can focus all efforts on a single market segment. Customers within the selected segment can expect personal service from these firms, so they can compete even with large firms.
j) Utilizes resources efficiently:
By segmenting markets, resources can be utilized more efficiently. The strategy enables a marketing firm to use its marketing resources most efficiently in the market it has chosen. All attention is focused on the most promising market segment by the marketing firm. As compared to spending such resources on the entire market, this offers best results in terms of sales, profits, and consumer support.
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