The basis of market segmentation: a critical review of literature.
Marketing has become vital ingredient for every business success. It has almost become difficult for every competitor to survive in market for a prolonged period because competition is cut to throat. That is why development of right marketing strategy over time is required. Right marketing strategy is something that helps companies to achieve marketing objectives. The strategy of dividing the market in homogenous group is known as segmentation. Market segmentation was first put forward in the middle of 1950s by Wendell.R.Smith, an American professor of marketing. “Market segmentation is to divide a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes.” (Charles W. Lamb 2003). 2) Steps in marketing segmentation
The first step in segmenting market is to ‘select a market or a product category for study’. It may be a market in which the firm has already occupied a new but related market or product category, or a totally new one. The second step is to ‘choose a basis or bases for segmenting the market’. This step requires managerial insight, creativity and market knowledge. A successful plan includes four basic criteria: “substantiality, identifiably, accessibility, and responsiveness. The third step is ‘selecting segmentation descriptors’. Descriptors identify the specific segmentation variables to use. The fourth one is to ‘profile and analyze segments’. The information we get from the analyses can be used to rank the potential market segments by profit opportunity, risk, consistency with organizational task and objectives, and other factors which are important to the company. The fifth step is to ‘select target markets’. This is not a part a part of segmentation process but a natural result of it. It is the major decision that affects and often directly determines the firm’s...
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