Underlying requirements for market segmentation

Underlying requirements for market segmentation Three basic propositions underpin market segmentation as a component of marketing strategy:

1- For segmentation to be useful customers must differ from one another in some important respect, which can be used to divide the total market. If they were not different in some significant way, if they were totally homogeneous, then there would be no need or basis on which to segment the market. However, in reality, all customers differ in some respect. The key to whether a particular difference is useful for segmentation purposes lies in the extent to which the differences are related to different behavior patterns (e.g. different levels of demand for the product or service, or different use/benefit requirements) or susceptibility to different marketing mix combinations (e.g. different product/service offerings, media, messages, prices or distribution channels), i.e. whether the differences are important to how we develop a marketing strategy.

2- The operational use of segmentation usually requires that segment targets can be identified by measurable characteristics to enable their potential value as a market target to be estimated and for the segment to be identified. Crucial to utilizing a segmentation scheme to make better marketing decisions is the ability of the marketing strategist to evaluate segment attractiveness and the current or potential strengths the company has in serving a particular segment. Depending on the level of segmentation analysis, this may require internal company analysis or external market appraisal. The external market evaluation of segments and selection of market targets are discussed in many articles.

3- The effective application of segmentation strategy also requires that selected segments be isolated from the remainder of the market, enabling them to be targeted with a distinct market offering. Where segments are not distinct they do not form a clear target for the company’s marketing efforts.

For any segmentation scheme to be useful it must possess the above three characteristics...

Thanks for your consideration, Mohammad Farahi