Market Segmentation

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Market segmentation is a strategy used by Companies to divide “a broad target market into subsets of consumers, businesses or countries who have common needs and priorities” (Munaga Ramakrishna Mohan Rao,2015). In identifying the specific needs and wants of a particular group they will be in better position to tailoring their strategy, service/product offering to target that group. It is widely acknowledge in literature that the primary goal of successful market segmentation is to retain existing customers, attract new customers with the overall goal of increased company profitability.

There are number basis for segmenting a market. Demographic segmentation such as gender, age, income levels, and geographic segmentation based on location,
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There are a number of stages a client goes through from identifying the company, becoming aware of the products and services, to making a purchase. The customer journey evaluates the customer behaviours and experience at each stage to see if their needs are being met. For it to be of value it must represent the actual customer experience as against the experience you think the customer is having. A customer journey map according to Myron D (2014) “provides a concise picture of what customers are doing, thinking, and…show more content…
They point to the benefits of improved communication, better understanding customer expectations and perceptions of service quality leading to improved sales, increased profitability, reduced customer turnover, service cost and time.
Maintaining existing loyal customers giving rise to a stable customer base is widely acknowledged as one of the key benefits of good customer relationships. Tao F (2014) refers to a study which showed that the cost of developing a new customer is six times higher than maintain an existing customer. While a loyal customer is less costly they also become advocates for the brand and can generate new business through recommendations to others.
With good customer relationship a company gains better information and insight into the customer, their behaviours, preferences and needs. The company is then in a position to target their service levels and strategies for those customer they want to value and reward, increasing customer retention and leading to be better cost management, Hotchkiss, D.A (1996). It also maximises sales and cross selling opportunities to successfully penetrate the market (Unhanandana MI S, & Wattanasupachoke T, 2012). In monitoring and identifying changing needs and preferences through customer relationship, a company
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