For many companies, an understanding of how certain groups of people perceive and react to particular types of advertising is a key component of how products are offered to each group. So business executives implement a strategy, called market segmentation, which divides larger markets into subgroups or segments of consumers exhibiting common needs and ways in which they use products and
. services.Market segmentation analysts divide consumers into workable segments to define a market. Analysts also seek to uncover trends and additional applications of products/services. Companies use the information to reach the largest possible number of people in a subgroup.Generally, consumer segments are identified by several different demographics in localities or regions, such as: income, age, ecommerce and buying patterns. Marketing campaigns are developed and put into action based on that segmentation. For example, advertisements promoting products for children employ different tones and content than media communications selling the same items to parents. A restaurant chain, with locations near universities, tends to cater to college students while restaurants in the same chain adjust advertising and menus to attract senior citizens in suburban or rural areas. Corporations like Apple Computers are known to separate markets into practicable categories, such as small business, large business, home, education and government-specific segments.What are advantages of market segmentation? Many company executives find that they can optimize the use of resources, with more efficiency and less waste, particularly when marketing resources are limited. There is the chance to gain competitive advantages in particular areas of the market. Important feedback distinguishes successes quickly and indicates requirements for product modifications to fit consumer needs. Companies can increase their market share or percentage of sales of particular products or services. More benefits are: more satisfied customers; increased forecasting ability; and guidance for additional marketing research and opportunities.What are disadvantages of market segmentation? It is possible that increased costs are incurred in order to obtain information on subgroups, with higher advertising and other costs. A company can limit its popularity. Misreading the desires of a target segment and mis-segmented markets can cause consumer backlash.More reference links: http://www.cuttingedgeinfo.com/research/sales/market-segmentation/ http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P03_1036
