Reason’s for market segmentation


Facilitates Proper Choice of target Market

In the first place, segmentation helps the marketer to distinguish one customer group from another within a given market and thereby enables him to decide which segment should form his target market.

Facilitates Tapping of the Market, Adapting the Offer to the Target

Segmentation also enables the marketer to crystallize the needs of the target buyers. It also helps him to generate an accurate prediction of the likely responses from each segment of the target buyers. Moreover, when buyers are handled after careful segmentation, the responses from each segment will be homogeneous. This, in turn, will help the marketer develop marketing offers/programs that are most suited to each group. He can achieve the specialization that is required in product, distribution, promotion and pricing for matching the particular customer group, and develop marketing offers and appeals that match the requirements of that particular group.

We are giving below a case of Ford motors adaptation to suit the target market.

Ford modified its models for the Indian target segment as shown below,

Higher ground clearance & Stiffer rear springs to make the car more compatible to the rougher road surface and to enable negotiating the ubiquitous potholes on Indian roads.

Changes were made in cooling requirements with greater airflow towards the rear side and surfaces coated having a higher resistance to dust.

The engine is made compatible with the quality of fuel available in India.

Location of horn buttons on the steering wheel. As the Indian motorist uses the horn far more frequently, for cars sold in India, the horn buttons are kept on the steering and not on a lever on the side as in the models sold in Europe.

The Ford Strategy

It will be clear from the following that through segmentation, car manufacturers have gained useful insights on the product features/benefits to be provided to different segments of car buyers. It will also be clear that within a given segment, the Indian requirement is often unique, giving rise to an India-specific sub-segment within any segment. Product offerings have to be tailored to suit Indian conditions, especially Indian roads. From the details provided, it will be clear that firms do appreciate this reality and they provide specific offers/models suiting the Indian segment.

The above points explain how Ford has gained useful insights through segmentation and adapted its offer to suit the Indian target segment.

In recent years, other carmakers have also identified distinct segments in the Indian car market and offered distinct models for each of them. For example, Daewoo offers eight variants of its Cielo, and Ford Mahindra four versions of the Ford Escorts.

‘Divide the Markets and conquer them’ through segmentation:

Given above is a successful marketer’s strategy. The marketer can look at the differences among the customer groups and decide on appropriate strategies/offers or each group. This is precisely why some marketing experts have described segmentation as a strategy of dividing the markets for conquering them.

Makes the Marketing Effort more Efficient and Economic

Segmentation also makes the marketing effort more efficient and economic. It ensures that the marketing effort is concentrated on well defined and carefully chosen segments. The resources of any firm are limited and no firm can normally afford to attack and tap the entire market without any delimitation whatsoever. It would benefit the firm if the efforts were concentrated on segments that are the most productive and profitable ones.

Identify less satisfied Segments and concentrate on them:

Segmentation also helps the marketer assess as to what extent existing offers from competitors match the needs of different customer segments. The marketer can thus identify the relatively less satisfied segment and succeed by satisfying such segments.

Benefits the Customer:

Segmentation brings benefits not only to the marketer, but to the customer as well. When segmentation attains higher levels of sophistication and perfection, customers and companies can conveniently settle down with each other, and at such a stage, they can safely rely on each other’s discrimination. The firm can anticipate the wants of the customers and the customers can anticipate the capabilities of the firm.