23 Importance or Benefits of Market Segmentation (Explained)

Market segmentation reflects reality in a marketing situation and explains the different needs and preferences of the consumers in a different market. Market segmentation provides a basis for improved performance through correct application f selected marketing concepts and techniques.

Importance or Benefits of Market Segmentation
Importance or Benefits of Market Segmentation

Hence, in reality, market demand is heterogeneous and not homogeneous. When differences in customer needs are analysed, the analysis may reveal that certain customer needs are not at all met and the marketer can exploit such a golden marketing opportunity and fill these needs.

This can yield more profits and prospects for further growth.

Segmentation ensures higher customer satisfaction and improves the effectiveness of the marketing programme.

Importance or Benefits of Market Segmentation

In short, the market segmentation offers the following benefits or advantages:

1. Better Position to Locate Marketing Opportunities

Under markets segmentation, marketers are in a better position to locate and compare marketing opportunities.

In the regions where the response of the customers is relativity poor, the strategy of approach can be readjusted accordingly to push the sales.

2. Effective Utilisation of Resources

Segmentation leads to the more effective utilisation of marketing resources because the consumer is in the focus of marketing efforts and only target markets are served.

In the regions having comparatively poor marketing facilities, less amount of resources are provided and thereby maximum resources are allotted and utilised in regions having wider marketing facilities.

In this way, resources can be used in the most profitable manner.

Related: 18 Aims and Objectives of Advertising (Explained).

3. Facing the Competition Effectively

Market Segmentation helps the producers to face the competition of his rivals effectively.

After assessing his competitive strengths and weakness, the marketers can adopt different Strategies for different markets taking into account the rival strategies.

4. Marketing Programme

When customer needs are fully understood, marketers can effectively formulate and implement marketing programmes which will be tuned with the demand of the market.

Different marketing programmes can be formulated and implemented for different segments.

5. Effective Advertising Appeal

Different advertising appeals can be formulated and implemented in accordance with the needs of different market segments and thus making the advertising appeal more effective.

Related: How to Choose Right Advertising Media Decision (15 Key Factors).

6. Precise Marketing Objectives

Once the marketing director does discover the most pragmatically useful ways of segmenting his market, it becomes a new standard for almost all his evolutions.

advantages of market segmentation with examples
Advantages of market segmentation with examples

He will use it to appraise competitive strengths and vulnerabilities, to plan his product line, to determine his advertising and selling strategy, and to set precise marketing objectives against which performance can later be measured.

7. Adjustment in Products

Under market segmentation, marketers can easily map finer adjustment in their products and market communications according to the taste, need, nature and income of the customers and they can use rifle approach instead of Shotgun approach.

In this way, the product can be tailored to the precisely known needs of the segment concerned.

Related: 15 Factors that Affecting Market Segmentation.

8. Helpful In Product Design

Market segmentation helps him in designing a product size that truly parallels the demands of the market instead of one that bulks in some areas and ignores or scants other potentially quite profitable segments.

9. Enhances Marketing Efficiency

Market segmentation enhances marketing efficiency by offering specific pricing, sales promotion, and distribution channels as per differing response features of each segment.

Marketing strategies (product, pricing, sales promotion, advertising, distribution channel, etc.) may be tailored to the unique needs of all segments.

Related: Top 10 Benefits & Importance of Marketing Research (Update).

10. Choosing Advertising Media

The marketer can make finer advertisements of his products and marketing appeals once he decides the market segments.

In other words, he can conversely divide marketing programmes aimed at meeting different needs of buyers, or market can be defined more previously in terms of customer needs.

Market Segmentation helps him to choose advertising media more wisely and determine the proportion of the budget that should be allocated to each medium in the light of anticipated impact. 

11. Maximum Consumer Satisfaction

The four Ps of marketing mix products, price, place (physical distribution) and promotion can be used judiciously, intelligently and rationally to obtain the twin objectives maximum consumer satisfaction and profitable sales volume.

12. Traditional Demographic Methods

Traditional demographic methods of market segmentation do not usually provide this knowledge.

Analysis of market segments by age, sex, geography, and income level are not likely to provide as much direction for marketing strategy as management requires. Top 6 Pricing Methods Used in Marketing (Explained).

13. Matching Market Opportunities

Market segmentation helps in matching market opportunities and company resources in the best way.

It alone can maximize the impact of a firm’s strengths and minimise the exposure of its weakness.

The marketers are in a better and commanding position to spot and compare marketing opportunities. He can assess the requirements of each segment and design the sales accordingly.

25 Major Benefits or Advantages of Branding (Explained).

14. Right Time for Promotional Activities

It helps him to correct the timing of advertising and promotional effort so that they are divided into the weeks, months, and Seasons when selling resistance is least and responsiveness is likely to be at its maximum.

It helps him to direct the appropriate amounts of promotional alternatives and money to the most potentially profitable segments of his market.

15. Miscellaneous Benefits or Advantages

Some other important benefits of market segmentation are as follows:

  1. The firm can tailor its marketing plans and programmes according to the needs of the market.
  2. It can design the right product and services that really matter market demand.
  3. The company’s financial, managerial and human resources can be effectively used to reap the advantages of the potentially highly profitable markets.
  4. Even a small Marketing firm with limited resources can compete more effectively in one or two market niches, whereas it might be suicidal for it does compete in the total market.
  5. The marketers can fully utilise the knowledge of the market response due to segmentation and plan the market budget accordingly to his best advantage.
  6. Sound marketing objectives depend on knowledge of how segments, which produce the most customers for a company’s brands differ in requirements and susceptibilities from the segments which produce the largest number of customers for competitive brands.
  7. It helps marketers to catch the first sign of a major trend in a swiftly changing market and thus give him time to prepare to take advantage of it.
  8. It helps marketer in determining the appeals that will be most effective in his company’s advertising, and where several different appeals are significantly effective, quantify the segments of the market responsive to each.
  9. It helps him to understand otherwise seemingly meaningless demographic market information and apply it in scores of New and effective ways.

Thus, now you know the Importance or Benefits of Market Segmentation. If you have any Doubt…Just Comment…

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