Why Isn't Market Segmentation Strategy Always Successful

Topics: Marketing, Market segmentation, Psychographic Pages: 4 (1143 words) Published: March 3, 2011
Market is the place where buyers meet respective sellers. While a collection of sellers constitute the industry for a good or service, a collection of buyers constitute the market for that good or service. Neither markets nor buyers are homogeneous in nature (Alderson, 1983; Assael and Roscoe, 1976; Claycamp and Massy, 1968; Smith, 1956; cited in Kara and Kaynak, 1997). Therefore, it is important for marketers to segregate customers with similar needs and wants as well as similar characteristics from others to cater to that particular group’s requirements.A clear appreciation of customer needs and wants will ultimately lead to an effective segmentation (Grover and Srinivasan, 1987; Ranchhod et al., 2001: cited in Dibb, 2005).Marketing can be defined, according to the Chartered Institute of Marketing (CIM), UK, as “the management process that identifies, anticipates and satisfies customer requirements (needs and wants) profitably”.Depending on these needs and wants as well as the characteristics, the marketers set the most suitable marketing mix elements for that particular market segment. A marketer needs to identify which market segment/s could be served effectively and in turn which segment offers the greatest opportunity (Kotler, 2001; Kotler and Keller, 2006) for his marketing efforts.According to Dibb and Simkin (1991) as cited in Kara and Kaynak (1997), the market segmentation exercise usually consists of three main stages; (1) segmentation (2) targeting and (3) positioning. All three stages are fully interrelated and equally important for a successful segmentation strategy.Market segmentationIf needs and characteristics of people in a market are similar, there is little point segmenting such a market. However, in general it is not easy to find a homogeneous market in nature.The first requirement for segmentation is that the market should be heterogeneous.  The diversity in customer needs and buying behaviour is the key prerequisite for segmentation. Once...
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