There are four criteria necessary to effectively segment a market. Segmentation of a market must be homogenous within, heterogeneous between, substantial and operational. These criteria ensure that the marketing mix and the segmenting divisions are profitable and useful for identifying customers; as well as their needs, trends, wants, etc. The bases for these criteria are simply this: the segmenting divisions and the responses to the four Ps (product, place, price, promotion) and of course its profitability.
When we say that segmentation requires that it is homogenous within it simply means that responses to the marketing mix, targeted quite particularly, should be similar. This also suggests that the criterion behooves similar segmenting divisions in order to better zero in on one’s target. Of course, customers in different segments should be heterogeneous to one another and have different responses to one’s marketing mix and different segmenting division; quite obviously.
We also must examine the substantiality and operational enough to serve the needs and wants of the marketer. Substantiality of a segment is determined by the size of that particular segment; in other words, it must be substantially big enough to reap profit at the bottom line or else one wouldn’t aspire to do business with this segment. If the segment is substantial then one should focus on the fourth criteria for segmenting a market, the operational aspect of segmentation. This simply means that the measure of how operational the segment may be is determined by its usefulness in identifying the customers and helpful in determining the proper marketing strategies, i.e. marketing mix.
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