The literature on market segmentation and its various aspects Essay

The literature on market segmentation and its various aspects - Essay Example This research will begin with the statement that we are living in a global village. With the advancements in the fields of science and technology, the world is getting closer and closer and this fact is impacting the business world too. As a result of globalization, the customer base of the organizations is also increasing, leading to more diversification, especially in terms of their needs regarding specific products. This situation made the marketers develop a strategy that we call segmentation. The literal meaning of segmentation is to divide into pieces. It is often taken in the context of classifying the things into different groups so that all the objects in one group are identical to one another, sharing a common profile and on the basis of those factors, are different from other segments. This analogy has been borrowed by marketers in the same context. In the field of marketing, market segmentation is the process of dividing the market into similar groups such that individual s/businesses within each group share common characteristics. Used for: Profiling, Trade Area Analysis. Segmentation is the process of partitioning markets into groups of potential customers with similar needs and/or characteristics who are likely to exhibit similar purchase behavior. Market segmentation is a marketing approach that encompasses the identification of different groups of customers with different needs or responses to marketing activity. The market segmentation process also considers which of these segments to target.... egmentation of markets into homogenous groups of customers, each of them reacting differently to promotion, communication, pricing and other variables of the marketing mix. Market segments should be formed in that way that differences between buyers within each segment are as small as possible. Thus, every segment can be addressed with an individually targeted marketing mix. (Bennette 1998) "One of the most important strategic concepts contributed by the marketing discipline to business firms and other types of organizations is that of market segmentation" (Myers, 1996). Market Segmentation is considered and propagated by the marketing gurus as yet another step ahead of the previous ones in order to make the marketing plans and their implementation more effective and efficient in terms of its productivity. It is considered by them as a newer development in the domains of marketing research. Why Segmentation There are a number of reasons to do market segmentation. Few of them, as available in literature, are stated below: Better serving customers needs and wants The foremost advantage of segmentation is that it helps to serve the customers' needs and wants in a more effective manner. .(Aker 1991) Higher Profits As a result of segmentation, due to development of of separate strategies for each of the segment, the organization would be catering greater number of customers in each segment than what it had been serving for each segment without segmentation. This would lead to higher profits. (Asael 1987) Opportunities for Growth The organization can grow in terms of its volume of sales as well as customer base. Sustainable customer relationships in all phases of customer life cycle As a result of the customized strategies for each segment, a Sustainable customer