What are the benefits of market segmentation for the business?
Unless a target market is selected and well researched and understood; whatever a company will produce will not be desired by the consumers as it is not perceived satisfactory or meeting the needs of that specific market. Market segmentation will allow the company to:
1. Be able to match each product with the customer need that it satisfies; different products to meet the different needs.
2. Will better enhance profits, as with market segmentation, company will be able to price / increase price of each product offering differently depending on the segment’s price sensitivity of its consumers.
3. When a company produces different variants or levels of products for different segments; each product level has higher margin than the other, which increases the growth opportunity of customers from one product level to the other.
4. By segmenting the market based on different ages, family needs, income…etc., products will then be available to meet the customer needs as he or she moves from one life cycle to the other; which ensures customer retention and unlikeliness of moving to a competitor’s brand.
5. When producing any product; a company needs to communicate and promote that product to the public and therefore segmentation will make it easier to communicate the product to the targeted customers cause the communication mode will be tailored to be perceived and understood by the consumers of theta specific targeted market.
6. With market segmentation a company will know which segment can accommodate more innovative products and accordingly higher prices. Other segments will have lower profit margin as the prices are low and there are no much need for innovation that will cost more money and will be perceived unnecessary by the consumer of that specific segment.
7. Segmenting allows any company to have a market share in the segment that it can serve and have a good profit margin instead of trying to capture a market share in a market where the biggest
1. Be able to match each product with the customer need that it satisfies; different products to meet the different needs.
2. Will better enhance profits, as with market segmentation, company will be able to price / increase price of each product offering differently depending on the segment’s price sensitivity of its consumers.
3. When a company produces different variants or levels of products for different segments; each product level has higher margin than the other, which increases the growth opportunity of customers from one product level to the other.
4. By segmenting the market based on different ages, family needs, income…etc., products will then be available to meet the customer needs as he or she moves from one life cycle to the other; which ensures customer retention and unlikeliness of moving to a competitor’s brand.
5. When producing any product; a company needs to communicate and promote that product to the public and therefore segmentation will make it easier to communicate the product to the targeted customers cause the communication mode will be tailored to be perceived and understood by the consumers of theta specific targeted market.
6. With market segmentation a company will know which segment can accommodate more innovative products and accordingly higher prices. Other segments will have lower profit margin as the prices are low and there are no much need for innovation that will cost more money and will be perceived unnecessary by the consumer of that specific segment.
7. Segmenting allows any company to have a market share in the segment that it can serve and have a good profit margin instead of trying to capture a market share in a market where the biggest