The Process of Market Segmentation Essay Example | Topics and Well Written Essays - 1500 words

The Process of Market Segmentation - Essay Example This research will begin with the statement that the business environment is highly competitive in the 21st century, as thousands of firms have emerged offering services and products to consumers. Some firms attract their customers through cost-effectiveness or price differentiation, while others aim to grasp their market through providing a unique product/service. While the strategies of firms may differ, the target group that firms are aiming to attract may be similar. All firms must ensure that the product/service that they are offering is different from their competitors in some aspect. In this era, there is no such thing as a standardized product which is suitable for use by all people. Hence, no firm seeks to target the whole market at large and it is highly difficult to target a large potential market with the same product and the same marketing strategies. No products except maybe staple foods such as fruits, vegetables, bread, butter, and other important dietary supplements are aimed at targeting the whole population of consumers and are standardized products. All other products or services are differentiated and conformed to the needs and wants of various target groups. Differentiation refers to adapting the characteristics and marketing of your product/service to fulfill the needs and wants of a particular target market. In order to select the target market for product/ service, a firm must indulge in the process of market segmentation.... This prevents duplication of resources and enables the business to directly target the segment that is more likely to be interested in their product/service offering rather than wasting time and resources upon targeting a massive market that may not be interested in the product/service at all (Yankelovich, 1964, pg. 75-77). Market segmentation allows the business to see the characteristics of its potential customers so that it can create its products according to their needs. For example, after segmenting the market according to the variables of age and gender, a certain cosmetics company found that the most potential lied within the segment of females aged 18-25. This would enable them to customize their products in order to suit the needs of this segment more adequately (Anthanpolusso, 1999, pp. 56-58). Moreover, once markets are segmented, different segments can be made differing offers according to their needs. There may be some segments which may be willing to pay a higher price while others may be price sensitive. Identifying the segments that would be willing to pay a higher price would enable the business to increase its profits. In the same manner, providing the price sensitive segments with initiatives to buy the product might increase the sales and result in more profits for the business (Barnett, 1965, pp. 45-47). Segmenting also allows more opportunities for growth as the same segments can be targeted in different manners. The various customer segments can be given incentives according to the offerings made to them previously. Such schemes include loyalty cards, bonus cards, and other factors. Market Segmentation allows the firm to target the most profitable market segments rather than focusing on less attractive markets. Moreover, it may also allow