Market Segmentation Theory

3 Key excerpts on "Market Segmentation Theory"

• 

  eBook - ePub

  International Marketing (RLE International Business)

  A Strategic Approach to World Markets

  • Simon Majaro(Author)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  Chapter 4

  Market Segmentation on a Global Scale

  The Meaning of Market Segmentation

  The concept of market segmentation has triggered the imagination of many marketers during the last decade. It is a strategy which enables the firm to maximise the results of a given marketing effort by exploiting clearly identified strengths in relation to a submarket which is either inadequately satisfied by other manufacturers or where the firm is particularly well placed to do an effective job.

  Every marketer recognises that it is not possible to satisfy the specific needs and requirements of every consumer. It is necessary to deal with groups of consumers or clusters of individuals who manifest similarities in consumption habits, social behaviour, economic characteristics or in some other distinguishable criterion. The extreme logical choices for the marketer are either to focus his attention on a wisely selected subgroup or submarket or to aim to differentiate the marketing programme so as to satisfy the largest number of heterogeneous members of the total market. The former option is economical and if well planned highly effective; the latter can be costly but in terms of sale volume probably much more substantial. At the same time one must not forget that concentration on specific submarkets can be fraught with vulnerability; differentiation, on the other hand, whilst more costly as an approach, avoids the risk of ‘placing all one's eggs in one basket’. It is not possible to determine which is the more appropriate policy for a specific situation without knowing all the pertinent facts surrounding the firm's circumstances and the characteristics of the marketplace in question. However, one of the basic decisions that a company must take in its marketing planning activity is whether it proposes to adopt a market segmentation policy or a market aggregation

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  The Dynamics of Labour Market Segmentation

  • Frank Wilkinson(Author)
  • 2013(Publication Date)
  • Academic Press

    (Publisher)

  The near-consensus among economists concerning the relevance of segmentation vanishes, however, when we move from the pre- to the in-market variant. When dualist and radical writers assert the impor-tance of segmentation they have in mind the in-market, not just the pre-market, category. Orthodox theorists, on the other hand, concede to a greater or lesser extent the rele-vance of market power and discrimination to the analysis of labour markets, but tend at the same time to view such in-fluences as transient aberrations in an essentially compe-titive market· Thus Becker (1967), in his analysis of the demand side of the same market for 'human capital', treats variation in individual abilities as the predominant source of differentiation in an individual's prospective earning capacity. He does indeed assign a role to factors distinctly suggestive of in-market segmentation: 'some differences in opportunities, such as discrimination and nepotism, affect demand curves' (p. 110η). Such influences are, however, treated as distinctly secondary in comparison to variations in ability — a stance attested to by his argument that dif-ferences between the demand curves of individuals for human capital would provide a useful measure of differences in 6 P. RYAN innate abilities. l * The dispute between the segmentationist and orthodox approaches hinges therefore upon their divergent assessments of the importance of in-market segmentation. The reluctance of many economists to grant a place to in-market segmentation reflects to some extent the theoretical and empirical snags involved in identifying its role. A deeper issue is, however, present: the relationship between the market and social inequality. In its competitive formulation, the market does no more than produce at the end of the period a reflection of the circumstances of market participants at the beginning of the period.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Strategic Marketing Planning

  • Richard M.S. Wilson, Colin Gilligan(Authors)
  • 2010(Publication Date)
  • Routledge

    (Publisher)

  et al. (1979) have suggested that changing values, new lifestyles, and the rising costs of products and services argue the case for what they call ‘counter-segmentation’; in other words, an aggregation of various parts of the market rather than their subdivision. The majority of writers, however, acknowledge the very real strategic importance of segmentation and, in particular, the ways in which it enables the organization to use its resources more effectively and with less wastage.

  9.3 The Nature and Purpose of Segmentation

  During the past 30 years, market segmentation has developed and been defined in a variety of ways. In essence, however, it is the process of dividing a varied and differing group of buyers or potential buyers into smaller groups, within which broadly similar patterns of buyers’ needs exist. By doing this, the marketing planner is attempting to break the market into more strategically manageable parts, which can then be targeted and satisfied far more precisely by making a series of perhaps small changes to the marketing mix. The rationale is straightforward and can be expressed most readily in terms of the fact that only rarely does a single product or marketing approach appeal to the needs and wants of all buyers. Because of this, the marketing strategist needs to categorize buyers on the basis both of their characteristics and their specific product needs, with a view then to adapting either the product or the marketing programme, or both, to satisfy these different tastes and demands.

  The potential benefits of a well-developed segmentation strategy can therefore be considerable, since an organization should be able to establish and strengthen its position in the market and, in this way, operate more effectively. Not only does it then become far more difficult for a competitor to attack, but it also allows the organization to build a greater degree of market sector knowledge and customer loyalty.

  Although the arguments for segmentation appear strong, it is only one of three quite distinct approaches to marketing strategy which exist. These are:

  Sign up to read

  Learn more about book