3.1.

4 How and why market segmentation is undertaken

Market segmentation is the first important step in developing a marketing strategy. In
order to plan their product development, pricing strategies, and promotions, businesses
will divide up the consumers who are likely to buy a product into different market
segments.

Effective market segmentation should:

● identify the market

● identify the wants and needs of the target market
● ensure that the most appropriate features are promoted
● ensure that effective methods of promotion are used.

The market-oriented firm has the ability to identify the target market of consumers with
particular characteristics at which to aim a product and marketing strategy.

Market segmentation recognizes that all potential users of a product are not alike, and
that what appeals to one group may not interest other consumers.

Example:
Ways to segment markets:
Benefits of segmentation

If a business is able to segment the market effectively, there are a number of benefits
that can be seen"

1. More effective marketing

○ appeals to the price, place, product, and promotional preference of the
target customer.
2. Easier identify gaps in the market
○ products can be adapted to exploit unmet needs.
3. Increased sales and profits
○ a larger customer base with specific needs leads to increased income.