Benefits of Segmentation

Market segmentation pertains to the division of a set of consumers into persons with similar needs and wants. Market segmentation allows for a better allocation of a firm's finite resources. 

While there may be theoretically 'ideal' market segments, in reality, every organization engaged in a market will develop different ways of imagining market segments, and create product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage. Most market segmentation are the techniques used to attract the right customer.

In essence, the marketing objectives of segmentation analysis are:

Ø  To reduce risk in deciding where, when, how, and to whom a product, service, or brand will be marketed

Ø  To increase marketing efficiency by directing effort specifically toward the designated segment in a manner consistent with that segment's characteristics

Market segmentation is a twofold process that includes:

Ø  Identifying and classifying people into homogeneous groupings, called segments

Ø  Determining which of thes

e segments are viable target markets.