MARKET SEGMENTATION

 INTRODUCTION

All corporate marketing activities have to be necessarily carried out in such a way that they lead to generation of surplus funds. Even in the case of non-profit and non-manufacturing set-ups, it becomes important to achieve marketing goals in the most economical way. This is so primarily because of budgetary constraints in such organisations. One of the ways to obtain economies in marketing is to concentrate and focus the marketing efforts in respect of a well defined homogeneous cluster of potential customers.

 That is, to choose its markets and serve them  through target marketing. In target marketing, sellers distinguish the major market segments, target one or more of these segments, and develop products and marketing programmes tailored to each segment. This approach known as market segmentation helps in optimizing the marketing mix for a segment. In this unit, we will examine the concept and bases for market segmentation.

OBJECTIVES

At the end of through this unit, you should be able to:
• explain the term market segmentation
• discuss the bases for market segmentation
• explain benefits derived from market segmentation
• explain methods of segment selection

 MAIN CONTENT

The Concept of a Market

Unless you know the exact market(s) to which your organisation wants to cater, your focus will be wrong and your planning will be faulty, and you will fail to develop an appropriate marketing strategy or effort to meet the needs of your target market. To identify the target market, let us first define the term ‘Market’.


The term market has more than one meaning: (a) A market is a place where people gather to transact business mainly to sell and buy commodities and other physical goods.
(b) It can be used in respect of the network of institutions like wholesalers and brokers dealing in a product.
(c) It can also be used to refer to the nature of demand for the product, as when we speak of the market for soap.
(d) A market can be referred to as people with needs and wants, with enough disposable income to spend on goods and services provided to satisfy their special needs and wants and the willingness to expend their income on these goods and services.
(e) Stanton (1981:65) defines a market as people with needs to satisfy, money to spend and willingness to spend it. Before you proceed further, do attempt this exercise

SELF-ASSESSMENT EXERCISE 1
In your own word(s), Can you then stop and explain what a market means?
In the market demand for any given product or service, there are three
factors to be considered – people with needs, their purchasing power and their buying behaviour.