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Segmentation is an effective method to increase the focus of a firm on market segments. 'Ustomer retention can be encouraged through the life cycle of a customer. Reebok e"panding with its fitness range of clothes and accessories%.
Segmentation is an effective method to increase the focus of a firm on market segments. 'Ustomer retention can be encouraged through the life cycle of a customer. Reebok e"panding with its fitness range of clothes and accessories%.
Segmentation is an effective method to increase the focus of a firm on market segments. 'Ustomer retention can be encouraged through the life cycle of a customer. Reebok e"panding with its fitness range of clothes and accessories%.
There are several Advantages of Marklet segmentation.
1) Focus of the Company Segmentation is an effective method to increase the
focus of a firm on market segments. If you have better focus, obviously you will have better returns. Numerous automobile companies have started focusing on small car segments. This is nothing else but a company changing its focus for better returns. Thus companies base their strategy completely on a new segment which increases its focus and profitability. 2) Increase in competitiveness Naturally, once your focus increases, your competitiveness in that market segment will increase. If you are focusing on youngsters, your brand recall and equity with youngsters will be very high. our market share might increase and the chances of a new competitor entering might be low. The brand loyalty will definitely increase. Thus market segmentation also increases competitiveness of a firm from a holistic view. 3) Market expansion !eographic segmentation is one type of segmentation where e"pansion is immediately possible. If you have your market strategy on the basis of grography, then once you are catering to a particular territory, you can immediately e"pand to a nearby territory. In the same way, if you are targeting customers based on their demography #$" reebok targets fitness enthusiasts% then you can e"pand in similar products #$" reebok e"panding with its fitness range of clothes and accessories%. Segmentation plays a crucial role in e"pansion. ou cannot e"pand in a territory when you have no idea of which segment of customers you will be meeting. ) Customer retention &y using segmentation, 'ustomer retention can be encouraged through the life cycle of a customer. The best e"ample of this is the (utomobile and the (irlines segment. ou will find ma)or e"ample of customer life cycle segmentation in the *ospitality segment whether they be hotels , airlines, or hospitals. In India, Titan is an e"ample of products which are planned through the life cycle of a customer. +rom fast track to Sonata and the high range watches, Titan has them by price segment as well as life cycle segment. Thus a watch is available for any customer who enters a Titan showroom, whatever be his age. !) "ave #etter communication ,ne of the factors of marketing mi" which is absolutely dependent on ST- is -romotions or communications. The communications of a company needs to be spot on for its T(.!$T market. Thus if you need a target market, you need segmentation. 'ommunication cannot be possible without knowing your target market. Imagine if you had to make someone across a curtain understand what is politics. ou would go on about ruling parties, states, countries and politicians. (nd when the curtain is taken aside, you find that the person across the curtain is a / year old kid. Is there any use talking to him about politics0 This shows why communication needs segmentation. If you dont know your market segment, what is their demography, what is their psychology, where they are from, then how can you form a communication message. $) Increases profita#ility Segmentation increases competitiveness, brand recall, brand equity, customer retention, communications. Thus if it is affecting so many factors of your business, then definitely it affects the profitability of the firm. 1o you ever see people negotiating in a Nike, !ucci or &23 showrooms0 ou wont. ,ne of the 4S-5s of these brand is their segmentation. They are in fact targeting segments which have no need of bargaining or negotiation. Thus their profitability is high. imitations of Market segmentation %egmentation also has its limitations as it needs to #e implemented in the proper manner& As segmentation is one of the most important process in the marketing plan or for your #usiness' you need to kno( the limitations of segmentation and (hat pitfalls lie ahead if you go (rong (ith your target market segment& 1) %egments are too small ) If the chosen segment is too small then you (ill not have the proper turnover (hich in turn (ill affect the total margins and the via#ility of the #usiness& 2) Consumers are misinterpreted ) *he right product to the (rong customers& +hat if your market research says that your customers (ant a ne( soap and you come out (ith a ne( facial cream& *he concept is same' cleanliness& ,ut the concept is completely different& 3) Costing is not taken into consideration ) *argeting a segment is ok #ut you also need to kno( ho( much you (ill have to spend to target a particular segment& If it is a %ec A segment and you do not have the #udget to #e present in the places the the %ec A customer visits' then your segmentation strategy is a failure& ) *here are too many #rands ) Along (ith segmentation' you also need to check out the competition offered in the same segment from other products& -etting into a segment already saturated (ill mean higher costs and lesser profit margins& !) Consumer are confused ) If the consumer himself doesn.t kno( (hether he (ill #e interested in a particular product or not' than that.s a sign that you need to get out of that segment / product& $) 0roduct is completely ne( ) If a product is completely ne( than there is no market research to #ase your segmentation on& 1ou need to market it to the masses and as acceptance increases' only then (ill you #e a#le to focus on one particular segment&