Advantages And Disadvantages Of Market Segmentation

 Benefits Or Advantages Of Market Segmentation


The main advantages of market segmentation can be highlighted as follows:


1. Market Identification 


It is the process of dividing the market into different segments and grouping the potential customers on the basis of demography, psychography, geography and behavior. It helps the marketer to identify the proper market and the right group of customers.


2. Market Specialization


Market segmentation helps to understand the needs, wants and desire of the customers. Marketers try to offer suitable products and services by developing right products, right price, suitable promotional techniques and better distribution channel to satisfy targeted customers. So, it promotes market specialization.


3. Market Expansion


Market expansion is possible with the help of geographic segmentation. So, it provides an opportunity to break into new market.


4. Customer Retention


Products and services are designed as per the needs and interests of the customers. So, market segmentation leads to customers satisfaction. Satisfied customers become loyal to the company. Therefore, it promotes customer life cycle and customer retention.


5. Better Strategies


It helps the marketers to design better marketing strategies, proper utilization of resources and better allocation of budget to satisfy the needs of the market. Better marketing strategy also help to deal properly with the competitors also.


6. Suitable For


Market segmentation is suitable for small and newly established firms because they cannot compete with large companies in the entire market.


Disadvantages Of Market Segmentation


The main drawbacks or disadvantages of market segmentation can be highlighted as follows:


1. Increased Costs


It requires more efforts, time and money for research and development, promotion and distribution. Costs also increase because of different marketing strategies in different market segments. Inventory costs also increase because of larger inventory of goods. So, market segmentation increases overall costs of the company.


advantages disadvantages market segmentation

2. Wrong Selection 


It works properly if right and relevant market segments are selected . There may exist a chance of selection of wrong, irrelevant and very small segments . In such situation, company fails to identify right group of customers and cannot sell its products or services properly.


3. Change In The Market


Characteristic of market changes according to the change in the behavior, buying habit and income of the customers. Marketers may face difficulties because of these changes in the market.