Market segmentation is the process of categorizing consumers in different segments in a business market based on some shared characteristics (Wedel & Kamakura, 2012). There are different ways in which present or expected consumers may be divided in different segments. Research suggests that there are five main bases of market segmentation i.e. geographic, demographic, psychographic, behavioristic and image (Beane & Ennis, 1987). The aim of this paper is to shed some light not exactly on the types of market segmentation and how they are done but to focus on the different aspects of market segmentation and explain why these aspects are important are going to be important to any line of professional work that I will be involved with in the future. Just like any other business concept, market segmentation has its own place in the development of a business. This help businesses identify their target market and devise advertisement, marketing and other promotional strategies to reach out to this specific segment of market to increase their sales and win over new loyal customers and retain their existing. In the coming section of this paper I would be describing each of my point one by one with citations from credible academic sources. The paper is written in accordance with my desire to be a part of a workplace which is involved in the manufacturing of goods for the consumer market. At this moment, I cannot be specific about manufacturing a specific good, therefore the paper would address this type of workplace in general in relation to the concept of market segmentation.
Why Market segmentation?
Why a market segmentation might be necessary for any business not just a specific business that I may be related to in my future professional life is an important question. I mean that there has to be some benefits of the phenomenon that would make it such a useful and important part of a business. As I said earlier that I would like to be a part of a company that I involved with the manufacturing of goods for the consumer market, I think it would be necessary to know a market first before any goods can be produced. It is not about what the segment is? It’s about the size of the segment, the financial status of the segment, the purchasing power of the segment, their lifestyles and so. It is important for a business to know about their expected buyer response during the market segmentation (Neal & Wurst, 2001). Market segmentation would help in understanding the buyer response if the segmentation is completed effectively. In my opinion the question of the standard of quality is also dependent on the identification of the market segment. There should obviously be no compromise on quality but to be realistic, there are quality grades that target different segments of the consumer market depending on their purchasing power. Due to these reason and many more that are specifically related to the phenomenon of market segmentation, I think that the manufacturing business or organization that I would be working for in the future, this phenomenon would greatly apply.
High market share matters for businesses
I am sure that any manufacturing organization that I would be a part of would definitely want to have a desire to have a high market share. Market share can be increased by identifying a market segment or segments. Over here I am not talking about the general market but the share of a business within a specific segment as compared to its competitors. If a manufacturing business is aware of its market share, they would be able to plan their manufacturing operations accordingly. To have a high market share, a manufacturing process would be producing items in larger quantity, hence minimizing the manufacturing costs. This will give an opportunity for the organization to involve its employees in different manufacturing operations and hence the company would not lose financial resource is paying its employees for sitting idle doing nothing.
Market segmentation would help my manufacturing organization in understanding the specific needs of the consumers and hence would result in a larger market share if the needs of the consumers are understood correctly and they are fulfilled efficiently with the manufacturing of items that they really need. With effective market segmentation, buyers trust can be won which is an important factor in maximizing the market share. Once the buyers trust is achieved, it would decrease their purchasing decision uncertainty (Gao, Sirgy & Bird, 2005) and hence they would be able to decide the items that my organization is producing.
Specializing a specific market segments
This topic is briefly discussed in the above discussion. I would like to shed some more light on it from a perspective of belonging to an organization that is involved in the manufacturing process. Different companies specialize in different products. These product may not be for just any consumer out there in the consumer market. Instead each product is produced keeping a specific segment in mind. This benefits the organization in two ways. First is that the organization has an easy access to that specific segment of the consumer market because they become aware of their dynamics. Second and most important is that this give the organization an opportunity to focus on a few or may be just one product hence making them a specialist in it. My organization would also benefit from the different strategies of market segmentation in the same way. It would know who they are making the product for and would gain experience from producing the same item again and again hence be able to innovate in producing improved versions of the product as time passes. Research suggests that market segmentation leads to market innovation (Johne, 1999).
How to choose a market segment?
Choosing a market segment is not an easy task at all. For any organization that would be involved in the manufacturing processes, it would be necessary to devise ways by which they are affectively able to choses a specific market segment. If the organization is able to choose a correct market segment, they would be able to successfully deal with it. But, if unfortunately the market segment is not identified successfully, the manufacturing could be in vain. There could be an abundance of products produced, but there would be no consumer market to purchase these products to. A consumer market can be chosen in many ways including the demographics, their psychographics, geographic or behavioristic characteristics. An organization can also use a mix of these characteristics while making a decision about the market segment they are targeting. The starting point however should be at looking the present customers. A list of the potential segment can be made and its size can be assessed to make the decision of the manufacturing of the products. Sometime it is possible that the size of the segment is so small that the manufacturing decision may not be even made.
Role in marketing strategies
The manufacturing processes do not take place independently. Marketing research is conducted prior to deciding what products are to be produced and in what quantities. In any organization the market research is a necessary part of the decisions related to the manufacturing and marketing of products and services (Moorman, Zaltman & Deshpande, 1992). Market research lets us know the segments that exist in a specific consumer market and which segments can we target for our products in the manufacturing and marketing stages. Once we are aware of the market segment, it becomes easy to develop marketing strategies to market our product to it. At this stage we know what the different characteristics of the market segment are and how can they be effectively reached out to and convinced so that they can make a decision to buy the products we are producing. Segmentation process lets us avoid many confusions that may arise during the marketing processes (Dickson & Ginter, 1987). With market segmentation, a company can identify the specific characteristics that the segment shares and marketing strategy can be specifically planned for it.
I would like to conclude my discussion by stressing that market segmentation is a great way to deal with a consumer market more effectively than if the segments were not identified. This can help any organization devise marketing, manufacturing, supply chain and many more strategies. Market segmentation can help maximize profits and the market share which are among the main goals of any organization. I am sure that the application of market segmentation strategies would prove vital for the manufacturing organization that I would be a part of in my professional life.