What is market Segmentation? Explain its benefits.
A market segment is group of buyers having similar wants. Market segmentation is a process of dividing the entire heterogeneous market into similar homogeneous ones on the basis of different customer characteristics.
According to Philip Kotler, Market segmentation “is the sub-dividing of a market into homogeneous sub sets of customers where any sub set may conceivably be selected as a market to be reached with distinct marketing mix.”
According to Prof. William J. Stanton, “Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub markets or segments each of which tends to be homogeneous in all significant aspects.”
Benefits of Market Segmentation:
Market consists of various sub-segments and it is not possible to appeal to all segments. Therefore profitable segments have to be identified by the firm which it can serve effectively and efficiently. Proper use of market segmentation strategy benefits both the organisations and customers.
The benefits of market segmentation are as follows:
- It helps in better understanding of market, i.e. knowing what customer wants and why they buy or do not buy a product.
- A better understanding of the market helps in developing an effective marketing program to meet the wants of the customers.
- An effective marketing program leads to greater customer satisfaction.
- By concentrating on a few segments only, better utilisation of resources can be ensured.
- Market segmentation helps in better assessment of the competitors position. Here the firm can avoid those segments where competitors are strong.
