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Home » Management Homework Help » Marketing Management Help » Market Segmentation Facts
Market Segmentation Facts
Segmentation studies are designed to discover the needs and wants of specific groups of consumers so that specialized goods and services can be developed to satisfy their needs. Many new products have been developed to fill gaps in the market place revealed by segmentation research.

In addition to filling product gaps or need gaps, segmentation studies are used to identify the most appropriate media in which to place the advertisement. The media industry uses segmentation research to provide detailed profiles of their audiences and share their findings with advertisers seeking a similar audience.

An important need to be made at this between a segment and sector. The automobile industry in India is divided into A, B, C segment hatch back sedans, SUV’s and so on. These descriptions do not describe consumer needs, as much as they describe the physical attributes of the automobiles. SUV customers are not a homogenous group as customers within the group will differ in terms of attributes they consider important. These divisions therefore are specialized group represent sectors and not market segments. Sectors exist because portioning an industry into sectors only makes the segmentation exercise more manageable. Companies like Mahindra and Mahindra have segmented the SUV market and developed specific products like Scorpio, bolero, maxx (all within the SUV category) for the different market segments.

The second important point to note is that marketers do not create market segments, simply because marketers do not create needs. The marketer’s task is to identify the segments and to decide which one is to target. Even within market segments, the concept of perfect homogeneous is a myth as no people can be identical. Individual customization may not be economically feasible for marketers and customers alike; marketers try to meet an individuals needs, by offering a basic naked solution containing the product elements that all customers within the segment value, with a variety of discretionary options that would vary in customer preferences.

Niche marketing

A niche is a narrow defined group of customers seeking a highly distinctive and unique solution. Niche segments consist of buyers with high purchasing power, who have unique needs and a strong motivation to fulfill their needs hence are willing to pay a premium for a unique solution that satisfies their needs. Harley Davidson targets bikers who share a “passion” for biking and whose lifestyles revolve around their passion. Bose audio systems, a worldwide pioneer of high performances audio systems targets the niche market of consumers who share a passion for music and want to “experience” music. Today the company has developed products for several sectors, such as business and retail solutions, stage performances, aviation and military applications.

Later on, as you learn about the criteria for effective market segmentation, you will understand that any small market cannot be termed as a niche, unless it satisfies the other criteria. Small market segments are not viable for any company as they do not satisfy the investments and may not respond to specific marketing mixes. Niche markets on the other hand are very profitable market segments, despite their size, as customers place a high value on the satisfaction of their unique needs.

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