MARKET SEGMENTATION AND PRODUCT POSITIONING
Most companies and organization practice on effective marketing through focusing on consumers they have the greatest chance of
satisfying
This they achieve through ;
1. Identify and profile distict group of buyers who differ in their needs and wants[market segmentation]
2.Selecting one or more market segments to enter market [market targeting ]
3.For each target segment ,establish and communicate the distictive benefits of the companies market offering [market positioning]
MARKET SEGMENTATION
Most products have heterogeneous market [No single uniformity]
To able to satisy consumers ,marketers divide the heterogenious market to form a fairly homogenius sub-markets of customers in a
process called market segmentation
Each segment is assumed to have similar needs and respond similarily
Business entity now decides which segment can it best satisfy
Benefits of market segmentation
I. Compels marketers to focus ,more accurately on customer needs
II. Segmentation lead to the identification of excellent new marketing opportunities
III. Market segmentation provides guide line for development of separate market offering and strategies for various
market segmentation
IV. Segmentation can help guide the proper allocation of marketing resources
Disadvantages of market segmentation
1. The development and marketing of separate models and market offering is very expensive. One standardized model is much
cheaper to manufacture and to market
2. Only limited market coverage is achieved since marketing strategies would be directed at specific market segment only.
3. Excessive differentiation on the basis product may eventually lead to proliferation of models and variations, and finally to
cannibalization among the models/variations. This happens when one product takes away market share from another
product of the same firm
Prerequisites for Market Segmentation
Essentially market segmentation is meant to enhance customer satisfaction and increase profitability for the organization.. For
segmentation to be effective, it must meet the following criteria: -
i. It must be measurable
The size, purchasing power, potential profit of the segment must be measurable.
ii. It must be large enough
A market segment that is too small is not profitable due to lack of economies of scale
3. It must be accessible
;The marketer must be able to reach the market segment with his or her market offering and marketing strategy.
It must be actionable
It must be possible to develop separate marketing offering for different market segments.
i. It must be differentiable
Different market segments must exhibit heterogeneous needs, people in different segment must have different needs, demands and
desires, while people in the same segment must exhibit similar/homogeneous characteristic and needs.
