Market Segmentation


	Market Segmentation
	Advantages Business can define target market precisely and design and produce goods specifically aimed at these groups-increased sales. Enables identification of gaps in the market - groups of consumers that are not currently being targeted - and these might then be successfully exploited. Differentiated marketing strategies-focused on target market groups. Avoids wasting money on trying to sell products ot the whole market-some consumer groups will have no intention of buying the product. Small firms unable to compete in the whole market able to specialise in one or two market segments. Price discrimination - used to increase revenue and profits.	Disadvantages Research and development and production costs might be high as a result of marketing several different product variations. Promotional costs - high as different advertisements and promotions might be needed for different segments- marketing economies of scale may not be fully exploited. Production and stock-holding costs- high than for the option of just producing and stocking one differentiated product. By focusing on one or two limited market segments there is a danger that excessive specialisation could lead to problems if consumers in those segments change their purchasing habits significantly. Extensive market research needed
	Evaluation

Business can define target market precisely and design and produce goods specifically aimed at these groups-increased sales.
Enables identification of gaps in the market - groups of consumers that are not currently being targeted - and these might then be successfully exploited.
Differentiated marketing strategies-focused on target market groups. Avoids wasting money on trying to sell products ot the whole market-some consumer groups will have no intention of buying the product.
Small firms unable to compete in the whole market able to specialise in one or two market segments.
Price discrimination - used to increase revenue and profits.

Research and development and production costs might be high as a result of marketing several different product variations.
Promotional costs - high as different advertisements and promotions might be needed for different segments- marketing economies of scale may not be fully exploited.
Production and stock-holding costs- high than for the option of just producing and stocking one differentiated product.
By focusing on one or two limited market segments there is a danger that excessive specialisation could lead to problems if consumers in those segments change their purchasing habits significantly.
Extensive market research needed

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