5 Good Reasons For Doing Market Segmentation

Due to the broad nature of the market, promoting products will be too high and unattainable. There is need to divide it into smaller sets so that maximum satisfaction to the set of customers could be achieved. The following are several reasons to segment a market.

1. Increase in Profit

Except for few organization that are not profit oriented, Most businesses are setup to make profits.However, customers have different disposable income and also their sense of spending are quite dissimilar. Segmenting a market will enable organization sell same product to different set of customers based on their disposable income. Organizations can enhance their profits this way by raising their prices for different segments.

2. Popularity in the Market

Through careful segmentation and proper targeting, smaller businesses are able to compete with stronger and leading ones in the market. Usually strong companies have an edge over smaller ones in terms of production and marketing cost which are very lower since they already are the choice of the customers. But by dividing the market into smaller groups and focusing on just the need of target market segment, the smaller firm will be able to have an edge in this target segment.

3. Better Customer satisfaction

As stated above, customers sensitivity are different. So also are their needs. By creating separate solutions for each segment a better satisfaction to the customers can be achieved.

4. Better opportunity for product sales growth

Market segmentation can build sales margin. A customers may be encouraged to sell a product he has bought before for another one (trade-up) so as to improve the sale margin of the later one.

5. Very easier customer-business communication flow

Manufacturers of products need to advertise and deliver their message to a relevant customer audience. And where there is a broad target market, there is a strong risk that the key customers will be missed and even the cost of communicating to customers will be too high. But if the market has been segmented, the target customers can be easily reached more often and at a lower cost