What is Market Segmentation and How it Affects Economy?

What is Market Segmentation and How it Affects Economy?

Segmentation is the process of dividing a heterogeneous market into different homogeneous segments to facilitate the marketing of products in the target market. Market segmentation helps the marketers to formulate and implement relevant strategies to promote their products. A market segment consists of consumers who have similar choices, interests and preferences. They generally possess similar perceptions and are interested in buying similar products. Through a process of segmentation, firms can easily select the best suited market segments and formulate strategies and plans to make their brands popular in the selected segments.

The different steps in the segmentation process involve identification, segmentation, targeting and positioning. The first step in segmentation is to identify a market so as to select the most appropriate target markets and develop a marketing mix accordingly. A market comprises of large volume of consumers, consumer preferences and interests which offers numerous market opportunities for a firm. The heterogeneities in a market enable a firm to divide it into small homogeneous market segments. For instance, a firm has identified and selected travel service market for its marketing efforts.

The second step is the identification of the market needs. In this stage, the needs of the potential customers on a given product in the identified market are closely examined. In the third stage segmentation is done. On the basis of the identified needs of the market, the firm has to divide the selected market into different sub markets. The fourth stage is the study of different segments. It is essential for the marketer to closely examine and study the needs, preferences buying behavior and size of the identified segments. The next stage is the selection of a particular market segment. Finally, the last stage is the formulation and implementation of marketing strategies. It is also known as positioning stage in which an identity or image of the product is created.

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