Market segmentation is a marketing strategy that is one of steps goes into defining the selection of consumers who have common need and will assist consumers with products that satisfy their individual sets of needs and buying practices. The purpose of market segmentation is to guide the consumer purchases, businesses are offering through marketing and sales program to maintain sales and growth of the business to survive from competitive market industry. In order to achieve that, businesses rapidly release product with similar characteristic. Therefore an organization needs to respond consumer’s preference, willing to change and quickly adapt to the new ways of conducting business. The logical segmentation of marketing planning process will determined what an organization can become and how it can achieve that goal from selected segments and formulate marketing activities including geographic such as region, size, population or climate, demographic such as gender, income, age or occupation or psychographic such as activity, interest, opinion or attitude and behavioral such as benefits sought, usage rate or brand loyalty.(Business Software Resource 2012) If it is perform systematically, it will allow a company to achieve its highest return such as Nissan, breaks out of sales declines and weak product lineup in 2002 and Wireless Telecommunication Industry, makes profits $152.6 billion USD in 2011. Theory
The logical segmentation of marketing planning is enabled to set a strategic planning that will determining what an organization can become and how it can achieve that goal from selected segments and formulate marketing activities. The key stages of this process fall into three stages including goal setting, compiling a situation review, strategy formulation and monitoring.(Malcome and Ian 2003) When an organization decides to set a goal, they need to collect information about size and growth of market will be into and consumer’s preference to satisfy. (Art 2004) states that researching customer's preference is an essential component of segmentation that analyse the customer’s satisfaction at profit. After deciding the target market, it moves to compiling a situation review stage that an organization applies the key element of segmentation to analyze their strength, weakness, opportunity and treat. Therefore, it is necessary to understand what customers would like to get and what they prepared to give it return in customer’s point of view. (Malcome and Ian 2004) reveals that this understanding is a simple way to gain the benefits from the product and service. In strategy formulation and monitoring stage, an organization is estimate of expected results of market strategy formulation from the marketing objectives and reevaluates their strategy to identify alternatives from new opportunity or circumvent potential treat
Importance of market segmentation
Furthermore, it is essential to understand the benefits and complexities of market segmentation. Segmentation is an effective method to boost up the concentrate of a firm on market segments to allocate a company to achieve its highest return on investment (ROI). A business can apply various types of segmentation strategies to search for a new market segment, which can attract new consumers with curiosity to new product.
Previous studies show that mass marketing creates the largest potential market at the lowest costs, which can lead to lower prices and higher profit margins (Martin 2011). There are several advantages of segmentation. Thus, when the business’s focus improves, simultaneously increase in competitiveness in the market. As the business enters the new segment in advance, it will obtain higher market share percentage and low in competition. Popular brand would be beneficial. In contrast, minor brands might suffer from lack of scale economies in production and marketing, pressures from distributors and limited space on the...