It is the analytical process of identifying the groups of buyers on the basis of differences in their desires or requirements. Market segmentation is bending supply to the will of demand.
In order to divide the total market into appropriate segments, an entrepreneur must consider segmentation variables, which are parameters that identify the particular dimensions that distinguish one form of market behavior from another.
For most products, the total potential market is too diverse or heterogeneous to be treated as a single market. Organizations tailor their offerings to fit the carefully defined needs of specific groups of customers by dividing the public at large into specific sub-markets.
Once the market segment is clearly identified, it becomes easier for an organization to make a product to appear different from those of its competitors.
For companies trading in numerous countries around the world, there is clearly an enormous attraction in finding a single global segmentation model that can be applied to every country.
The experience of ‘globalization’ has highlighted for many of these companies that they have to ‘act local’ in order to succeed in their market.
The basic goal of market segmentation is to determine the target market, which consists of a set of buyers who share common needs or characteristics that the company decides to serve.
Market segmentation
