Market segmentation helps a company is long-term planning and sustainability. With the passage of time, competition is rising in every market, and there is a strong need to focus on trends and consumer needs. Consumer’s interests and needs are also changing as the technology is advancing.
As long as a company is not sure of its target audience, it is investing blindly. Market segmentation helps a company in understanding consumer needs and interests.
Every successful brand pays vital attention to market segmentation before determining its products. A product launched for a specific target market never fails, and it is easy to start and advertise.
Trends change very often, and the rivals keep increasing if your company knows exactly which people to target with which product, you will make sales.
If you launch a product without knowing how many people might be interested in this flavor and to which segment of the market you have to advertise this product. In such cases, products fail, and their promotion is expensive, you have nobody to sell to.
But imagine if you were going to launch a mango flavor ice cream, and you strongly considered it after proper market segmentation, you had the right audience to advertise to, your product will generate sales.
Some of the benefits of market segmentation are:
Clarity in Business Plan
As long as a business plan is not based on a transparent market, it is under liability. A business plan developed after proper consideration of market segmentation and realization of the target audience will succeed. However, if the idea is to target the whole market, there is no clarity, and there are few chances of sustainability.
Market segmentation is done using tools and techniques that are capable of dividing audience according to their interests and needs. Since your target audience can be identified and some necessary details can be acquired about them, it is convenient to plan a marketing strategy that will perform conversions.
If a company is not sure of its target market which is acquired through market segmentation, it is difficult to meet customer expectations. Market segmentation aids in understanding customer behavior and consequently, the company can communicate with the target market more suitably.
Easy to target audience
Market segmentation offers a complete analysis of the target audience and their preferences. Since the target audience is realized more clearly, the company can design marketing techniques focusing on the micro market containing their target audience rather than focusing on the whole market.
A product focusing cannot be launched for the whole World. It has to be specifically for a class or group of people, and if it is supposed to target everybody, it is targeting nobody!
Why? Because when you target a particular class, the design, architecture, quality, price, and functionalities, everything is planned according to that market. A product designed for no specific market will not suit everyone with all required features.
Competitive edge over rivals
A better understanding of audience needs and interests helps in offering more suitable features in the products of a company. Consumers prefer most suitable products, and as long as a company keeps polishing its product’s according to the audience, it never goes out of demand. Companies focusing on market segmentation have an edge over their rivals.
Enhanced profits for business
Your target market has customers with different affordability range, and market segmentation helps in understanding in which price range your products need to be. As pricing according to your target market will add affordability to your products, more sales will be generated.
Imagine launching Roles Royce in African market vs. Roles Royce launching in the American market. There is an absolute difference, right? If you are focusing on a market without considering its economic conditions, there are going to be very clients buying your product.
Determine market opportunities
Sooner or later, every successful company want to expand, and the expansion is often in the form of launching new products or targeting a new market. But is there any need to do market segmentation for new products if core products are already generating revenue?
Yes. Your core products might be focusing on a specific market with specific needs. Before finalizing any new product, you have to segment your market according to latest trends and consider the potential market.
If your target market is saturated and your company is willing to jump to a new product, market segmentation can help in determining possible opportunities in the market. New markets can be targeted according to the feasibility in results of market segmentation.
Long term relationship
Since your products will be designed according to a specific group of people and within their price range, your clients will prefer looking for their favorite products only in one place. Many people look for clothing only at particular brands, and for years, they buy only from those brands cause they are trustable, and they have what their customers need from time to time. That is what you need to build between your brand and your customers.
With the passage of time, you can introduce high price products to your clients, but for that, you have to build a relationship of trust with your clients. This is possible just as long as the market segmentation is carried out.
Successful brands develop long-term relationships with their clients. But how do they do that? Before planning a product they do thorough research on market segmentation and realize the missed features and functionalities in available products. Accordingly, the come up will products, offering those functionalities.