The Use and Limits of Segmentation
Category: Marketing
Some of the reasons for utilising segmentation have been elaborated by Fitzroy. He suggests that it is useful in:
Achieving a better competitive position for existing brands.
More effectively positioning an existing brand by appealing to a limited market.
Separating two or more brands of the same company to minimise cannibalisation.
Identifying gaps in the market which represent new product opportunities.
Identifying potential new buyers for the product.
Morden expounds the strategic utility of segmentation. Linked with product positioning strategy, segmentation can allow better focus on increasingly fragmented markets.
Kotler warns that to be truly effective three major constraints of segmentation need to be investigated. Firstly the segments must be measurable. Very unusual bases for segmentation may lead to great difficulties in data collection for both planning and control. Secondly, in markets where great use is made of advertising there may be little match between segment population definition and media audience definition. For example, it is unlikely that all the audience for a particular national newspaper has similar attitudes to convenience foods. Thus mass advertising may be necessary to reach such segments and the costs of reaching each member of that segment may be enormous. Thirdly, each segment should be substantial enough in size to warrant particular attention.