What is meant by market segmentation? Briefly describe the main objectives of market segmentation.

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Meaning and Definition of Market Segmentation

The concept of market segmentation is based on the fact that markets for commodities are heterogeneous rather than homogeneous. There is no disparity or uniformity in the nature, quality, interest, habit, income, way of purchasing, etc., of two consumers or buyers of a commodity. Customers can be divided into certain segments on the basis of these characteristics. The characteristics of the customers of each segment are different from the customers of other segments and similarities are found in the characteristics or characteristics of the customers of each segment. Thus market segmentation refers to dividing the market into different segments on the basis of ethnicity. Market segmentation allows a different effective marketing program to be created to satisfy the customers of each segment. Segmentation refers to dividing the entire market of a commodity into different sub-markets and segments on the basis of customer characteristics, nature of market or sales areas. The market is segregated on the basis of the properties of the goods i.e. homogeneous and heterogeneous. The characteristics and nature of the market generally limit the marketing possibilities and opportunities for growth and the problem of successfully achieving the market remains the main problem before the managers. For this, it is necessary that a complete analysis of the market should be done and its separation should be done. In other words, it can be said that the art of dividing the market according to the need to make it effective and to get more and more buyers is called market segmentation.

(1) According to Philip Kotler, “The sub-division of the market into homogeneous sub-categories of customers is called market segmentation.

(2) William J. According to Stanton, “Market segmentation refers to the division of the entire heterogeneous market of a product into several sub-markets or sub-segments in such a way that each sub-market sub-segment is homogeneous in all important aspects.”

(3) A. According to Robert, “Market segmentation is the practice of dividing markets into pieces so that they can be conquered.

(4) According to the American Marketing Association, “Market segmentation refers to the division of a heterogeneous market into smaller customer segments having relative homogeneous characteristics, which the firm can satisfy.”

Objectives of Market Segmentation

Not all buyers of a commodity have similar characteristics, but many have the same characteristics. The type of buyer will be there, the way of purchasing them will also be similar. The main objective of market segmentation is to find out the buying behavior of the buyers so that the marketing methods can be adopted by the sellers accordingly. In short, market segmentation has the following objectives:

(1) Dividing into homogeneous classes – To divide the customers into homogeneous classes on the basis of their similar nature, temperament and qualities so that suitable program can be made for each class.

(2) Finding out Preferences The second purpose of segmentation is to find out the interests, purchasing habits, needs and commodity preferences of customers so as to decide whether one marketing will be suitable for all customers or not.

(3) Finding out areas – The third purpose of market segmentation is to find out in which areas new customers can be made by making efforts.

(4) Finding out the purchase potential – The fourth objective of market segmentation is to find out the purchase potential of different customer groups so that marketing goals can be set.

(5) To make the organization customer oriented – The ultimate objective of market segmentation is to make the organization customer oriented. So that profit can be made by keeping the customers satisfied.

Reasons for the Development of Market Segmentation

There are many reasons for the development of market segmentation, some of the main reasons can be explained as follows:

(1) Due to increase in the number of shortage of goods, the competition among sellers for the buyer’s rupee has increased. This means that every seller, by selling his article to the buyer, wants to get his money.

(2) Due to the adoption of self-service and its related cost reducing techniques, it has become necessary to have a good adjustment of the product and its demand. Product supply according to the market segment has the potential to make good adjustments to the product and its demand.

(3) Due to technological development, the minimum size of the efficient manufacturing unit of many goods has come down, so these goods can be produced on a smaller scale at the same cost per unit as before. This has made it possible for different market segments to produce goods according to their needs.

(4) For the last few decades, the buyer has started buying the goods carefully. With the increase in the income of the buyer, he has started putting more emphasis on getting the goods according to his interest, even if he has to pay a higher price. Market segmentation makes it easier to supply goods according to their interests.

(5) Market segmentation becomes necessary for growth after some time of growth. This is because spending on a marketing program operating at a common size tends to yield diminishing returns for all markets.

(6) Most of the total cost in many business firms is in the form of fixed cost. Therefore, it becomes necessary to bring overall stability in sales. Market segmentation plays an important role in this. It is based on the principle that every buyer is different from each other.

(7) The market is becoming customer oriented with the increase in the variety of goods and their substitutes. Seller is assisted in this task by buyer’s market segmentation for each seller to sell his item.

Bases of Market Segmentation

The basis of market segmentation can be many, such as economic, social, political competition, age of consumers, education, spending pattern, place of residence, quantity of consumption etc. Kandiff and Still have described the basis of market segmentation as follows: Basis for consumer market-1. Income of consumer 2. Age of consumer 3. Gender of consumer, 4. Status of urbanization in consumer, 5. Industrial division of consumer, 6. Education of consumer, 7. Religion of consumer

Basis of Industrial Market – 1. Type of business 2. General mode of purchase, 3. Size of consumer, 4. Geographical division. Philip Kotler has given the following basis of market segmentation

(1) This is the first basis of geo-market segmentation in which the entire market is divided on the geographical basis, such as hot zone and cold area, urban area and rural area. A national manufacturer can also divide its customers according to the sales area. Is.

(2) Psychological market segmentation can also occur on psychological grounds. There are some people in the society who consider buying latest things as their high status while some people like to buy simple things. In this way the customer can also be segmented on the psychological basis and more profit can be earned by manufacturing the goods on the psychological basis of the customer.

(3) Market segmentation can also take place on the basis of profit-for-profit. Here profit means the benefit of the commodity that the consumer gets by using that article, like in relation to the bath soap, there are some people who like the cleaning and disinfectant properties more. A manufacturer can do market segmentation by taking into account the benefits of these customers and make a profit by pointing their advertisement towards that.

(4) Demographics In this, the producer can make the group of his customers on the basis of their income, age, occupational education, nationality, social caste, religion, family size etc. Not only this, these bases can be further sub-divided into child, adolescent, adult and old age. On the basis of this information, efforts can be made to get maximum benefit in each division.

(5) Marketing – Marketing can also be the basis of market segmentation. This includes the price of the commodity, the quality of the commodity, retail advertising, etc. Thus the segmentation of the market can be done on these basis also.

(6) Quantity – In this, there can be segmentation of the market on the basis of the purchase quantity of the buyers of the commodity, as some customers are heavy buyers, some light while some middle class sellers can do division on this basis.

(7) Object surface – This is the modern basis for segmentation. Under this, at a particular place, customers are requested to compare the goods of that manufacturer with other manufacturers so that their preference can be ascertained. Based on this preference, clusters of customers can be created and market segmentation can be taken advantage of.

Importance of Market Segmentation

The importance of market segmentation can be explained as follows: (1) Helpful in sales promotion – Market segmentation helps in the selection of suitable sales promotion method. The effectiveness of the right sales promotion activities is increased. (2) Increase in Product Loyalty- Marketers who prepare the marketing mix according to the needs of a market segment are successful in inculcating product loyalty among the customers. They are thus able to stand up to competing products as well.

(3) Profit to a Small Firm – Even a small firm can achieve success in the market by using the concentrated marketing practice of market segmentation.

(4) Facing the Competition Possible- Market Segmentation can effectively combat the competition for different market segments by using different marketing strategy according to the competition.

(5) Facilitation in making suitable advertising appeals – Advertisement appeals can be made more effective by using different advertising channels for different market segments.

(6) Distribution of Marketing Budget A producer can earn a reasonable profit by apportioning his marketing budget on the basis of market segmentation. The sales budget can be increased by reducing the marketing budget in those places where the sales potential is less.

(7) Helps in selecting the appropriate product line The seller wants to create such a product line which can satisfy the demand of all the customer groups. This would not have been possible without the analysis of market segmentation. Many times sellers bring such a commodity in the market which fulfills the need of some customer-groups but denies other customers from fulfilling their need. The analysis of market segments identifies the commodity needs of each customer group and the product line includes those items that meet the needs of each customer group.

(8) Proper use of resources – By segmentation, a seller becomes successful in making better use of his resources. It can use its financial and marketing tools to suit the needs of different market segments. In the market segments where marketing potential is less, the marketing budget is also kept less. In this way unnecessary wastage of resources can be avoided.

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