Market
segmentation is the process of breaking a market into segments and marketing a product in
different ways to those different segments. It can also include coming up with different
products to sell to the different segments. Market segmentation is usually seen as a good thing
because it allows firms to tailor their products and/or marketing approaches so as to do the
best job of appealing to each segment.
However, market segmentation can have
drawbacks. The two most important examples are
- It can be costly
to identify all the different segments and then to spend the money to create different products
and/or marketing schemes for each. - It can make it harder for the company to
reach out to a broad range of consumers. If the firm only makes products that appeal to small
niches, it will be hard for it to become a widely-known and well-liked company across the whole
population of consumers. It might remain a small company, appealing only to small groups of
consumers.
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