How accessible is the segment? Can the business obtain real data to consider the potential of the segment? Is it measurable?
Market segmentation is done to clearly identify the various categories of customers in terms of needs and behaviour to better satisfy their needs. When the sellers and firms create separate segments of customers, it makes sense and provides customers with better solutions. Different customers have different amounts of disposable income and thus different in how they view price. Through segmentation, firms raise their average prices and thus enhanced profits for the business and builds up sales.
Customer circumstances change, for instance they may shift necessitating change in buying patterns (Gunderson, 2008). When the sellers market products appealing to customers at different stages will help the firm in retaining their customers who might otherwise be tempted to switch to different products. In marketing, firms need to deliver the right message to the relevant customer segment. If the target group is too broad, there is likelihood that the main customers will be missed and that the cost of communication will rise rendering the business unprofitable. Through segmentation, the target customers are reached at a lower cost. Firms always target to increase their market share in the industry in a bid to maximize profits. Careful market segmentation and targeting will enable the businesses to achieve competitive production and costs of marketing therefore increasing the market share.
There are various types of segmentation criteria including geographic segmentation. psychographics segmentation. demographic segmentation. and behavioralistic segmentation (Weinstein, 2004). When a company Toyota Motor Company produces cars for example, it segments its market into high, low and medium income earners and produces cars that customers in each segment can afford.