Thursday, May 29, 2014

What is the purpose of a market segmentation analysis?

The purpose
of a market segmentation analysis is to determine how a firm should split up, or segment, its
overall market.

When firms set out to do this, they are hoping to be more
effective in marketing their product to various parts of their customer base.  The firm does a
market segmentation analysis to try to determine what segments exist in its market.  The firm is
looking for discrete groups within that market that might respond to different marketing
strategies.  Once the market segmentation analysis identifies these groups, the firm can tailor
marketing strategies to the different needs of the various groups.

The
purpose of a market segmentation analysis, then, is to find discrete groups in a market so that
specific (and hopefully more effective) marketing strategies can be devised for each
group.

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