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10 Criteria For an Effective Market Segmentation

Market Segmentation is the act of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on some type of shared characteristics. it is the process of dividing the market of potential customers into groups, or segments, based on different characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations.

10 Criteria For an Effective Market Segmentation

Measurable and Obtainable The size, profile and other relevant characteristics of the segment must be measurable and obtainable in terms of data.

Relevant The size and profit potential of a market segment have to be large enough to economically justify separate marketing activities for this segment. If a segment is small in size then the cost of marketing activities cannot be justified.

Valid This means the extent to which the base is directly associated with the differences in needs and wants between the different segments. Given that the segmentation is essentially concerned with identifying groups with different needs and wants.

Stable the segments must be stable so that its behavior in the future can be predicted with a sufficient degree of confidence.

Actionable  It has to be possible to approach each segment with a particular marketing programme and to draw advantages from that. The segments that a company wishes to pursue must be actionable in the sense that there should be sufficient finance, personnel, and capability to take them all. depending upon the reach of the company, the segments must be selected.

Homogeneous the consumers allocated to each segment should be similar in some relevant way. This is the basis of market segmentation that the consumers in each segment are similar in terms of needs and characteristics.

Heterogeneous Each segment of consumers should be relatively unique, as compared to the other segments that have been constructed. This demonstrates that the consumers in the overall market have been effectively divided into sets of differing needs.

Measurable Some form of data should be available to measure the size of the market segment. Measurements are very important to be able to evaluate the overall attractiveness of each segment.

Substantial The market segment should be large enough, in terms of sales and profitability, to warrant the firm’s possible attention. Each firm will have minimum requirements for the financial return from their investment in a market, so it is necessary to only consider segments that are substantial enough to be of interest.

Accessible The market segment should be reachable, particularly in terms of distribution and communication. Each segment needs to be able to be reached and communicated with on an efficient basis

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