Market Segmentation In Business

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Market segmentation was first put forward in the middle of 1950s by Wendell.R.Smith, an American professor of marketing. “Market segmentation is to divide a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might need separate products or marketing mixes.”(Charles W. Lamb 2003). Segmentation is the process of dividing the market into groups of customers or consumers with similar needs. The more closely the needs match up, the smaller the segment tends to be but the higher the premium customers are likely to be ready to pay to have a product that more exactly meets their needs (Blythe, 2003). While market segmentation process helps organization to segment the total market and specify operation and value…show more content…
Strategic planning of marketing activities is the basis for long-term business success in market oriented companies (Milisavljević, 2010, p. 111).

According to modern authors in the field of marketing, one of basic strategies of strategic marketing is segmentation, the adequate application of which has become the basis for realization of competitive advantage in the market (Kotler & Keler, 2011, p. 118). The essence of segmentation is reflected in the division of market into a larger several homogenous subgroups of customers with similar needs and expectations. For different segments different marketing strategies need to be defined in order to

create competitive advantage with their implementation. Segmentation is a complex process based on processing of information on customers’ expectations and preferences. Information are often sub-different statistical methodologies that often do not give same
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Recognised outcomes include an improved understanding of customers, more efficient resource allocation, better-tailored marketing programmes, and enhanced competitiveness (Albert, 2003; Beane and Ennis, 1987; Freytag and Clarke, 2001).

The rationale behind marketing segmentation is to allow businesses to focus on their consumers’ behaviors and purchasing patterns. If done effectively, marketing segmentation allows an organization to do its highest return on investment (ROI) in turn for its marketing and sales expenses. If an organization markets its products or services to a consumer or business, it should focus on the various types of segmentation. Kotler (2010) describes segmentation as the classification of consumers within a market that share related needs and set up related purchasing behavioral habits.
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