Market Segmentation : Marketing And Strategic Planning

An Overview of Market Segmentation: basis, evaluations and issues

It was pointed out by researchers that business from all industry sectors uses market segmentation in their marketing and strategic planning nowadays. (Dibb, 1998, p.394) Among marketing activities, marketing segmentation is virtual for company success. Researchers have found that the companies without a clear idea of the nature of the target segment the firm using a ‘scatter-shot approach ' to marketing strategic decision making are with little chance to success. (West, Ford and Ibrahim, 2010, p.152) However, to find the best approach to consumer market segmentation requires a solid understanding of nature, basis of marketing segmentation and how to evaluate a segment in details. This literature review examines some of the scholarly work of marketing segment to generate a clear idea of how marketing segments are being conceptualized, divided and measured in an academic approach and address the issues and argument on the topic.

Background

Marketing segment was firstly introduced by Wendell Smith in 1956; he argued there is an emergency of marketing segmentation with the framework of imperfect competition and he differentiate segmentation strategy with product differentiation. He suggested that segment strategy is more based upon ‘development on the demand aspect of the market and represented a rational and more precise adjustment of a product and marketing effort to consumer or user requirements '. (Smith, 1956, p.3) He argued that market segmentation functioned as viewing a heterogeneous market as numerous smaller homogenous segments, which allowed ‘good and services produced for or presented as meeting their needs with precision '. (Smith, 1956, p.4) Later, th...

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...an a closed frame. To divide a successful segmentation, more criteria need to be considered the four beyond bases.

Evaluate segmentation

Following the statement above, the evaluation of a successful segmentation should be examined with at least five key criteria: measurable, substantial, accessible, differentiable and actionable.

1. Measurable indicates the size, purchase power, characteristics of segments could be measured.

2. Substantial means that the segments are large and profitable enough to serve.

3. Accessible suggested that the segment could be effectively reached and served

4. Differentiable means that the segment is conceptually distinguishable and respond differently to different marketing mix elements and programs.

5. Actionable stands for effective programs could be formulated for attracting and serving the segments. (Kotler and Keller, 2012, p.230)