A true marketing orientation requires orgs to focus on meeting the needs of customers. Few companies can supple one product for all eg water supply utility. Most companies face an increase in fragmented markets. SEGMENTATION is about identifying groups of buyers within a market place who have needs that are distinctive in the way they deviate from the ‘average’ customer. Def ‘the identification of sub-sets of buyers within a market who share similar needs and who have similar buying processes’. There are many possible factors that might influence an individual’s choice of product/car (personalisation).
The critical approach involves breaking down the ‘problem’ (how to persuade the customer to buy) into sub-problems.
Criteria for effective segmentation…What is an appropriate basis for segmenting one market may not be appropriate to all markets. We consider 4 criteria when assessing the effectiveness of any segmentation: *usefulness to a company’s marketing planning; size of the resulting segments; their measurability; and their accessibility.
This exercise is only useful to a company if it allows them to penetrate a greater proportion of its market that was not possible before taking out the exercise. Companies must be careful not to homogenise segments, as buyer views are always varied and diverse.
Segment size-as they segments become smaller, you are closer to achieving marketing philosophy of satisfying each customers needs, but if they become too small they become uneconomic to provide for. In finance eg car insurance this is easier eg over 50, classic car driver. At the other end is a paint manufacturer, must be more general, amateurs, professionals, adventurous. Each line of product would take a lot of work in the production line, and persuasion for wholesalers and retailers to stock each variant, creating problems for holding too many lines. As