Principles of Marketing. Why is Market Segmentation so Important?

Principles of Marketing. Why is Market Segmentation so Important?

After teaching marketing for over 10 years, I have started to recognize a few concepts that students in a Principles of Marketing class tend to have difficulties applying. One of these concepts is the technique of market segmentation.

“Why would we want to ignore certain customers and not capitalize on as many sales as we can?” students remark when we begin working on cases that involve industries requiring some level of segmentation.

I tell them that “if your product or service is not differentiated in the minds of consumers in at least some way that it will fade into the clutter of options all consumers now have at their fingertips.” I ask, “Would you even have the resources required to reach a mass market of diverse consumers?”

Slowly lightbulbs begin to turn on and students can see the value of using demographic, geographic, psychographic, and behavioral segmentation criteria to develop groups of consumers with similar needs for a specific categories of products. However, like many areas of marketing, this is one area that is quickly changing. Where demographic and geographic descriptions may have been adequate ways of describing a target market and directing a market strategy in the past, this is becoming less and less true.

Over the last decade we have been experiencing a confluence of consumers demanding customized treatment and organizations tapping into data mining and analytics technology that allows them to do just that. It is my opinion that companies will continue to move beyond the more descriptive psychographic and behavioral identifiers and approach much more emotional triggers when segmenting markets of consumers.

That being said, there is still part of me that can empathize with the initial remarks of many of my students. As a small business owner, I often have a hard time focusing only on one group of consumers and turning down opportunities to broaden my reach. However, I must keep telling myself that I only have the resources and time to work at becoming excellent within one area and for one group of consumers rather than “pretty good” in many areas for a broad range of customers.

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