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Hi, need to submit a 1000 words essay on the topic Market Segmentation (In simple terms).It is indeed quite a challenge to segment a price sensitive market, as the company might end up losing a good s
Hi, need to submit a 1000 words essay on the topic Market Segmentation (In simple terms).
It is indeed quite a challenge to segment a price sensitive market, as the company might end up losing a good share of its customers, if it plans its services for some other segment.
For example, if the segmentation is being done for the retail sector, then the segmentation process might involve classifying the customers on the basis of goods and commodities being purchased,
number of visits to the superstore, size of family etc. Similarly, if it has to be for an airlines industry, then we need to take into consideration the general aspects of airlines industry, duration of the travel, type of traveler - corporate or general etc. It is not a must that all corporate clients would prefer to have meals on their journey's ranging from one hour to two hours. Such a journey can be undertaken with a low cost airline which cuts the cost by not serving the meals. During such a journey what the client will be looking at is a thorough professional approach from the airline staff and a comfortable journey.
Therefore segmenting essentially involves identifying customers with homogenous attributes who are expected to respond to the company's marketing mix in similar manner. If the needs of customers are clubbed in this manner, the company can always pool its efforts towards making the experience of the customer or consumer worth the price being paid.
An effective and elaborate market segmentation is supposed to achieve the following:
Opportunities represented by each segment are clearly measurable and substantial: This implies that the material advantage for each segment must not be limited to intangibles only. Instead the advantages must be substantial enough to attract the existing as well the prospective customer. If the opportunities for customers are tangible enough, the existing customer base can be widened in due course or the segment can further be subdivided depending upon the extent of penetration being achieved by the company or the product portfolio.
Segments are accessible and identifiable for the company: The segments being targeted by the company must be within easy reach of the company, with existing infrastructure and related support base. For example, if the company plans to cater to the consumers in some remote locality, it must have strategic tie ups with local transporters and the community in general.
Meaningful differences exist between segments that will lead members to respond differently to elements of the marketing mix. It must be emphasized here that there are some segments which may not have easily distinguishable live dividing them, but it is equally true that there are segments which are poles apart as far as their needs are concerned. For example one person owning a Formula-1 race car might be having entirely different needs than an ordinary citizen using an MUV. While on the one hand F-1 racer requires best possible technology at any cost, the MUV car owner will have to see fuel efficiency and other price considerations before finalizing the deal.
Segmentation is strongly linked to the business mission, goals, and identifies opportunities that fit well with resources and capabilities of the company. Market segmentation is carried out depending upon the plans, mission and objectives of the company. A company will of course want to cater to a market where it feels more confident in taking on the