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REQUIREMENTS OF SEGMENTATION

Introduction

It is difficult to effectively cater for everybody in the market place, so businesses will aim their products and services at specific parts of the market. After selecting a segment (of the market), businesses should evaluate their choice carefully and ensure they have made the right decision. If a business begins promoting products (at market segments) without a full evaluation, it is risking wasting time and money. A successful market segment will usually meet the following criteria:

 

 

Clearly Defined and Distinguishable Segment

The chosen segments should be clearly defined to avoid doubt about which part of the market, the firm's marketing activities are aimed at. Otherwise there is a risk that market activities will "spill over" into different segments. If there is more than one segment, each one should be made up of target markets which require specific marketing, due to differences in buying behaviour. For example if married and unmarried men behave similarly when purchasing shoes, there is little value in placing them in different segments.

Measurability of Segment

Before embarking on a sales strategy it is important to know the size of existing sales in that segment. A firm also needs to know how product sales are growing in the chosen segment. If you can not measure the growth rate, it will be difficult to assess whether your chosen segment is profitable. For example smart phone sales are growing rapidly but which segments of the market are they growing in? and in which segments is growth stagnant?

Accessibility of segment

Accessibility is about communicating with your customers and being able to get things to them. Communication is usually through the internet, TV, radio. However if target customers do not use these things it will be difficult to communicate with them. Post is also a challenge unless you can find out where people making up your market segment live. If you cannot target your segment effectively through marketing communication then it is not viable as you will be unable to tell them about your product or firm.

The other aspect of accessibility is being able to distribute your product to your chosen segment. For example a shop based in South London is unlikely to get a large number of customers from North England. In this instance the shop will have to reassess it's chosen segment or think about solutions to help accessibility such as selling to customers through the internet and mailing out purchases.

Size and Suitability of Segment

Firms need to ensure that the segment is suitable. This means that the characteristics of the people making up the segment, suggest the segment are likely to buy the product and have the spending power to buy the product.

There needs to be an opportunity to increase product sales within the chosen segment. Using our smart phone example, if the chosen segment contains people aged 20-30 and if we imagine 95% of this age group own a smart phone, the chosen segment will probably need to be reconsidered. This is unless the company feels that the segment would like to replace their existing smart phone and have the money to purchase a replacement smart phone.

Segment suitability also includes the size of the segment. If the segment is too small, potential for sales growth will be limited. If is is too large, it will be difficult to create marketing activities to suit all of the groups included in the segment.

Actionability of Segment

Even if all of the criteria listed above are satisfied a segment is unsuitable unless the business has the resources to cater for the needs of the segment. For example a small business with a £45000 turnover would not accept a multi million pound manufacturing contract.

Conclusion

An effective segment is defined, measurable, accessible, actionable and suitable for the firm. These elements mean that a firm

- has a clearly defined, distinguishable and profitable segment
- has the resources to cater for its segments and
- is able to access its segment,

so that it can profit from a segment with growing product sales. If any of these elements is missing it will hinder the success of the firm and lead to wasted effort.

Different Types of Segmentation

 

 

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