Requirements of Effective Market Segmentation and Market Segmentation Evaluation

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You read about Requirements of Effective Market Segmentation  and Market Segmentation Evaluation. Although there are many ways to make market segmentation, but their effectiveness varies. For example, buyers of food in restaurants can be divided into customer blond, dark brown and black. But hair color does not affect the purchase of food in the restaurant. Moreover if all restaurant customers buy the same amount every month, convinced that all the food in the restaurant was the same quality, and are willing to pay the same price, the company will not benefit from the market segmentation.

To be useful, market segments must have the following characteristics according to Kotler, Bowen and Makens (2002, p.265):

a) can be measured (measurable)

The extent to which the segment size and purchasing power can be measured. Specific segmentation variables are difficult to measure, such as segment size teen drinkers, especially the reason for the rebellion to parents.

b) Accessible (accessable)

The extent to which the segment can be accessed and serviced effectively.

c) large enough (substantial)

The extent to which the segment is big enough or profitable enough to serve as a market. A segment is a homogeneous group who should be most economically feasible to support marketing programs tailored to the needs of that segment. For example, a large metropolitan area can support a variety of ethnic restaurants. By contrast, in a small town, ethnic restaurants are not likely to survive.

d) It can be distinguished (differentiable)

The extent to which segments can be conceptually separable and respond differently to marketing mix elements and different programs. If a woman who has been married and are not giving the same response on the sale of perfume, meaning of which is not a separate segment.

e) Can be implemented (actionable)

The extent to which effective programs can be designed to appeal to serve the segment - the segment.

Evaluation of Market Segmentation

When evaluating the market, companies must consider three factors (Kotler, Bowen and Makens, 2002, pp.265-267), namely:

1) The size and market growth.

The Company will analyze the size and growth of the segment, then select the segment that provides the best opportunities. First of all, the company must collect and analyze data at this time last sale of the segment, growth rates, and earnings are expected from the various segments. The Company will take an interest in a segment that has the characteristics of the proper size and growth, but this is relative.

2) The attractiveness of the segment structure.

Companies should examine a number of key structural factors that influence the attractiveness of data segments in the long run. For example, the attraction was reduced when the segment's segment has had many strong and aggressive competitors. The existence of many real or substitute products that could potentially limit prices and profits that can be taken from a segment. Also affect the relative strength of the buyer appeal of the segment, if the buyer is in a segment has a relatively strong bargaining power against the seller, it will be urged to drop prices, demanding better quality and service, and complained to the company with each other. All this came at the expense of seller profitability.

3) Objectives and corporate resources.

Even if a segment has the right size and growth as well as structurally attractive, companies should consider the purpose and its own resources in conjunction with a segment.