risk management process example

Definition of Market Segmentation, Benefits and requirements

Posted on

Definition of market segmentation was first introduced by Smith around the 1950s. He was the first to realize the importance of market segmentation.

The basis of market segmentation is the development of market demand and rational product or marketing adjustments to meet consumer needs.

Since then, market segmentation has become a marketable approach that is widely accepted and used.

Understanding market segmentation is a process of evaluating and grouping consumers to enable targeted marketing efforts.

Market segmentation is done when you divide a visitor or customer into a segment or group based on quality.

A business that does market segmentation will better understand and meet different consumer needs and can increase marketing efforts and offer the best products.

Understanding market segmentation according to experts

benefits of market segmentation

The definition of market segmentation is the process of dividing customers, or potential customers, into markets into various groups, or segments, where customers share the same level of interest in a set, or comparable, set of needs fulfilled by different marketing propositions (McDonald & Dunbar, 2004).

Market segmentation involves gathering potential buyers into groups that have general needs and will respond similarly to market actions (Kerin, 2011).

Both understanding of market segmentation according to the experts above can be concluded that market segmentation was created to divide customers into similar groups.

This shows that market segmentation is a step to identify and evaluate potential target markets.

This method is the best way to achieve goals by dividing the market as a whole into small and related customer groups.

Market segmentation requirements

to make market segmentation useful then this process must have measurable terms and characteristics.


If business people want to target market segments effectively, then they must be careful in evaluating characteristics to ensure that their investments are not wasted because they try to reach the wrong consumers.

Here are some market segmentation requirements:


All attributes of the market segment must be clear and have a good definition. This aims to avoid overlapping conditions in marketing so that there is waste or inefficiency.

The target market in each segment must have a different response from each other because if the way of responding to each segment is the same then this definition is still vague or not so different.


One of the conditions of market segmentation is that it must be accessible.

Therefore in segmenting the market must consider the habits of the target market and communication strategies to influence them.

In addition, business people must consider geography and distribution so that they can serve the market segment well

Size or size of market segmentation

The next requirement in market segmentation is to measure and evaluate the magnitude of the potential target market.

Although the purpose of market segmentation is to narrow the market into several groups, it still has to consider a fairly broad segment.

By choosing a large and broad market segmentation, it can provide more benefits for the company compared to a narrow market segment.


The last thing that is a condition of market segmentation is whether the business can meet the needs of the market segment.

Sometimes the market segments that we have evaluated are attractive targets but if your business cannot meet market needs then you should choose another segment.

Therefore you must really choose the right market segmentation and can be implemented.

Benefits of market segmentation

Following are some of the benefits of market segmentation:

1. Save time and money

The biggest benefit of market segmentation can help you save money and time because it only serves certain groups.

You will no longer make time and money just for effective marketing because your target market has been determined based on customer data.

2. Helps to determine market opportunities

With market segmentation, companies can study various market groups and the level of satisfaction with existing offers.

If there is dissatisfaction from the consumer over the offer in the segment, the company can make this an opportunity by creating a product that fits the segment.

This, of course, can help companies to determine market business opportunities that are appropriate to the segment.

3. Help make the right marketing system

With the existence of market segmentation, the company can understand the various mindset of consumers and this can help to adjust the marketing system to the target market.

This will make consumers increasingly feel that the product is very appropriate to meet their needs.

4. Determine product prices

In product marketing, the most important thing is to determine the right selling price of the product.

Therefore you can use market segmentation to identify the right price to target new customers in various markets and set prices accordingly

This can help to ensure that the price offer provided is not too expensive for your customers.

5. Assist distribution strategies

The benefit of other market segmentation is that it can help in identifying the optimal distribution strategy for your product.

For example, a clothing company identifies the right distribution channel that matches a predetermined market segment.

Such is the discussion about Understanding Market Segmentation, Benefits and Terms.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.