Define Market Segmentation. What are the characteristics or criteria of an effective segmentation?

Definition of Market Segmentation:
 

Segmentation is a consumer-oriented marketing strategy. It is a process of dividing the market based on interest, need, and motive of the consumer. Market segmentation simply means dividing the market or grouping of consumers. It refers to the grouping of consumers according to such characteristics as income, age, race, education, sex, geographic location, etc. Therefore market segmentation is the strategy that subdivides the target market into sub-groups of consumers with distinct and homogenous characteristics to develop and follow a distinct and differentiated marketing programme for each sub-group to enhance satisfaction to consumers and profit to the marketer. According to Philip Kotler, “ Market segmentation is the subdividing of a market into homogenous sub-sects of consumers where any sub-sects may conceivably be selected as a market target to be reached, With a distinct marketing mix.”

CHARACTERISTICS OR CRITERIA OF EFFECTIVE SEGMENTATION
The main criteria’s of effective segmentation are

1. Measurability
2. Substantiality
3. Accessibility
4. Differentiability
5. Auctionable
6. Nature of Demand
7. General considerations

 

Measurability
The main purpose of market segmentation is to measure the changing behaviour patterns of consumers. The size, profile, and other relevant characteristics of the segment must be measurable and obtainable in terms of data. Therefore, segments should be capable of giving accurate measurements.
 

Substantiality

Substantiality refers to the size of the segmented market. Segments must be large enough to be profitable. For a small segment, it may not be possible for the marketer to develop a separate marketing mix for such non-profitable segments.

Accessibility

The segment must be accessible, which means marketers must be able to reach the market segments at lower costs. Segments must be reachable by the company’s salespersons, distributors advertising media, etc.

Differentiability

The segment should be large enough to be considered as a separate market. Such segments must have
the individuality of their own so that it leads to different segments. 

 

Auctionable

The segments which the company wishes to pursue must be auctionable in the sense that there should
be sufficient finance, personnel, and capability to take them all. Hence, depending upon the reach of the company, the segments should be selected.

Nature of Demand

Segmentation is required only if there are marked differences in the nature of demand. Nature of demand refers to the different quantities demanded by various segments. Each segmented market must exhibit a difference in consumption rates from another segment.

General considerations

Apart from the above characteristics, the segment must have growth potential, be profitable, carries no unusual risks and has competitors who do not fight directly with the product or brand.