Market segmentation is the first step of a marketing strategy and can help in marketing decision making as well. It involves segmenting the market based on various factors such as demography, geographic, psychographic etc. You can refer to the following article to know more about how to segment a market for your business.
This article relates to the fact about how market segmentation is at the crux of decision making and how decision making can become so much easier after market segmentation. The reasons for the same are as follows.
1) Targeting –
Targeting the right customer depends entirely on the market segmentation which you have finalized. For example you have decided that your market segment will include only A class customers. Thus in this case your target customers are likely to be in the urban city and that too in cream areas only. Thus targeting the customer becomes easier after market segmentation.
2) Positioning –
Being the third leg of the segmentation, targeting and positioning triangle, positioning is only possible after market segmentation and targeting has been completed. For example – Your product is an IT product which has a geographic segmentation and needs to be targeted to the masses. Thus your positioning will be by advertising pricing and benefits of the product. In case you were targeting the A grade segment, your positioning will be by advertising class and status.
3) Giving more offers to the customers –
A brand like Big bazaar is existing in the market because it gives all products in one place. On the other hand, Pantaloons exists in the market because it has all other brands under one roof. This is what the customer wants. They can choose low cost or higher cost brands. Thus, segmentation can give a clear picture of all the different offers that a customer might be interested in.
4) Opportunities for growth –
While doing segmentation, you might notice a segment which you have ignore completely. This segment can be the one which drives your business in future for you. Thus it is an advice to do segmentation while making an annual business plan to see whether new segments have arrived in the market for your products or if an existing segment shows a growth in the near future for whatever reasons.
5) Understanding the market –
A market can be a jumble of different classes of customers. And the most important reason that market segmentation is important decision maker is that this jumble of customers will become clearer and you can see them as a potential group of buyers each with their own individual preferences. Thus, this helps you in segmenting the market properly and gives you the satisfaction that you are probably targeting each of the segment and have not left on any of your customers.
Thus the bottom line is that you need to carry out market segmentation from time to time to have a better understanding of the market, to target your customers better, position your product better in the mind of customers, notice any opportunities of growth and notice any growth opportunities. Can you think of other reasons market segmentation is important for decision making?