Market segmentation simply refers to the division of the entire market into different homogenous groups of customers. Market segmentation is very important as it allows the firm to effectively meet their customers’ needs. This is done through the development of products that are targeted towards a particular market segment.
Homogenous here simple means same or alike. This simply means that the needs, styles, tastes and preferences of the customers in that segment are all the same. This makes it much easier for the firm to take care of all its customers use different forms of product differentiation and assortment.
However, for market segmentation to be effective there are a number of requirements that need to be met by each market segment and these are:
The market segment should be measurable. It should be of a realistic size; a size that can be easily accounted for and one that the firm can effectively and efficiently produce products for. Continue reading