Market segmentation refers to the portion of the market that on the basis of the share characteristics of people which it covers. In other words, market segments may be well clarified as subsets. A segment can be provided as a homogeneous group of consumers. it also including testes, preferences, needs, wants and so on. Although this may be true that market segmentation is a process of grouping the market into different homogeneous segments. with its similar preferences. After all, divide the market into various parts is the market segmentation.
According to Kotler,” Market segmentation is the act of dividing a market into different groups of buyers with different needs and interests.”
The major and the most obvious benefit of market segmentation is to the consumers as due to the segmentation process. It also provides the following benefits to the individual firm:
For grouping the entire market into the different segments, marketers need to know the needs and wants of the customers. They analyze customers and as well as their needs for the purpose of which the product will customer prefer. This all information provides them the better picture and understanding of customers.
Understanding the customer in the first step in planning the appropriate programme to meet their needs. The information is getting from market segmentation allows the o organization to plan a systematic and effective market programme. It also reflects the current market conditions and allows for the future modification. That is, the firm can make finer adjustments of its products and appeals.
When specific products serve the different needs of the customers, it helps the organization to win major market shares. It is also helpful to earn more profit. By focusing on individualized serve group, a company will be in a better position to know the different needs of customers.
After clearly dividing the entire market into different segments, it becomes easy to target a particular market. It also focuses on the developing promotional strategies according to customer’s needs and wants for better positioning of the product.
It also improves the market position of the company by helping them to determine how well its products and services meet target needs. That comparison between competitors and their own products provide them with a clear picture of thier market position.
Once segments are clearly identified, it becomes easy for markets to define or select the target market accurately, It develops an appropriate marketing mix to channelize all the limited resources in the right direction.
Segmentation allows marketers to develop a better and effective marketing plan by matching a product or service to the needs of the target market. Finding, understanding and focusing on the needs of direct customers can make any company a market leader.
It is the effective method to increase the focus of a firm on market segments. If the company has better focus, obviously it will get better returns. That’s why some automobiles company focusing on the small cars segment. Thus companies base thier strategy completely on a new segment.