Benefits and Limitations of Market Segmentation | Skillshare Projects



Benefits and Limitations of Market Segmentation

Market segmentation is a customer oriented philosophy. We first identify the needs of customers within a segment and then satisfy those needs. Benefits offered by segmentation can be summarized as follows

  • By developing strong position in specialized market segments, medium sized firms can achieve a rapid growth rate.
  • By tailoring the marketing programs to individual market segments, marketer can do a better marketing job and make more efficient use of marketing resources.
  • People awareness is increasing in relation to their preferences. In these circumstances it is necessary that marketer must segment and then try to fulfill the needs of that segment.
  • It helps in determining the kinds of promotional devices that are effective and also helps to evaluate their results.
  • Appropriate decision making, relating to introduction of new products, promotion, distribution, pricing could be easily taken.

Limitations of Market Segmentation

While market segmentation can provide a lot of benefits, this strategy has some drawbacks with respect to cost and market coverage.

  • Market segmentation can be an expensive proposition in both production and marketing of products. From marketing point of view, the marketer has to develop different marketing mixes for different segments. In production, producing in mass quantities is much cheaper than making variety of products.
  • Other expenses like keeping adequate inventories of each style, color, promotional expenses also go up because different promotional mixes have to the formulated for different segments.
  • Administrative expenses also go up because marketer must plan and implement several different marketing programs.

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