Question

1. What are the criteria for successful market segmentation?

2. Explain the importance of market segmentation.

Answer 1

1.

Market segmentation or customer segmentation is the process of dividing the target market which is different from one another.

There are four types of market segmentation. They are:-

• Geographic segmentation by which market is divided by the climatic conditions, density, market size.
• Demographic segmentation is dividing the marked based on age, sex, ethnic background, income etc.
• Psychographics segmentation is dividing the market based on lifestyle, perception, desire etc.
• Behavioral segmentation is dividing the market based on the knowledge, attitude, uses of products, etc.

The five requirements for effective market segmentation are: -

• Measurable - It is important that the needs, size, income and characteristics of the target customer is measurable.
• Differentiable - It is important to differentiate customers into groups so that their response to different marketing mixes should be different.
• Reachable - The target customer segment should be accessible to distribution channel, advertising media and sales representatives.
• Sustainable - The target segment should be large enough so that business can make profit.
• Actionable - It is important that the market segment should be actionable so that organization can use marketing mix to fulfill the needs of the customers.

2.

Market segmentation or customer segmentation is the process of dividing the target market which is different from one another.

Market segmentation is important because

• It helps in creating the offer based on the needs of the customers with respect to their income, household composition, etc.
• It helps in identifying the correct segment for the product or services offered by the company which helps in creating effective market strategies for the group or groups.
• Market segmentation is a creative process as it provides the marketers with the insight to meet their goals and objectives and also help in profitability.
• It gives insight about the customers' buying habits that means what are they more likely to buy and when they buy.
• Customer segmentation will help the organization to efficiently use the marketing budget.