Benefits of Market Segmentation

• Knowing the Customer Better- Organization gets an idea who their customers will be and
can better focus on their traits, personalities, behaviour and purchasing patterns.

• Attention to Particular Segment- Segmentation allows the organization to pay attention to a

particular segment which will yield highest return. For example- A small scale company that is paying
full attention to a market instead of small segment will be wasting resources because it will not be
able to satisfy the large market with its limited resources.

• Strategy- Company makes strategy on the basis of the market. Making strategies for market
which are of no use will be a failure for the organization. So, it enables the company to make
strategy for a particular market only which is related to the operation of the organization. For
example- Coca cola is providing its product to the whole market, so obviously it will yield less profit
as whole market covers old age consumers and infant also. So, Coca Cola, when segment their
market on the basis of the age, they can easily make strategies for the teenager segment. So, the
resources are fully utilized.

Importance of Market Segmentation

Marketing Activities- Marketing activities of the company will be developed once the market is
divided into the smaller segment. Segment will help in determining the marketing activities
according to the behavior of the consumers.

Increase Marketing Effectiveness- Marketing effectiveness will be increased as marketer will know
what is required in that particular segment.

Generate greater customer satisfaction- Once the market is divided into smaller segment, customer
satisfaction will be increased. It is because the company will satisfy the needs of the customer
according to their behavior. For example- In a whole market, Company will have to focus on
everything to satisfy the customer, but when a market is segmented, Company will only focus on the
needs of that particular market.

Allocation of Marketing Budget- Marketing Budget can be allocated as Company will get an idea
where company has to spend much to increase the sales and where a company needs to spend less.

To estimate the level of sales- Sales can be estimated easily. Because a company will know what a
particular segment prefers.

Company Goals- Whatever activity is done in the business, is done to achieve the goals of the
company. So is the case with Segmentation, it is also done to help the company in achieving their
goals.

BCG Matrix • Matrix is developed by Bruce Henderson for Boston Consulting Group in 1970. •
According to this technique, businesses or the products are classified as low or high performers
depending upon their market growth rate and relative market shares. • It is used to identify how
corporate cash resources can be best used to maximize future growth and profits.

3. Main Tools in BCG Matrix • Market Share : It is the percentage of the total market that is being
survived by your company, measured in the terms of revenue or volume. • Market Growth : It is
used as measure of a market’s attractiveness.
4. BCG Matrix

5. Components of BCG Matrix Star :- Stars operate in high growth industries and maintain high
market share. Stars are both cash generators and cash users.  Question Mark(?) :- Question marks
are the brands that holds low market share in fast growing markets consuming large amount of cash
and incurring losses. Cash Cow:- Cash cows are usually large corporations or SBUs that are capable
of innovating new products or processes, which may become new stars. Dog :- Dogs hold low
market share as compared to competitors and operate in a slowly growing market. They are at
declining stage.

What Are The Benefits Of BCG Matrix?

BCG Matrix helps decision-makers evaluate the strategic position of products in their portfolio.

BCG Matrix helps companies decide which product to invest more in and which product to discard,
thereby increasing profitability

It helps the company decide the time and opportunity for expansion.