6 Pros and 3 Cons of Market Segmentation in Business

Pros and Cons of Market Segmentation

Market segmentation includes dividing a market into different consumer groups based on the unique characteristics each group shares. The following are some pros and cons of market segmentation it can offer to your business.

Pros of Market Segmentation

The following are the main advantages of market segmentation.

Helps To Attract the Right Customer

With market segmentation, you can divide a larger market into different segments called consumer groups. And, choose a group or two groups of consumers that have the best potential for your business.

Increase Marketing Efficiency

With the right understanding of your customers, you can make promotional messages tailored to them that will best appeal to them. It increases the chances that your marketing messages will be successfully received by customers.

Marketing activities are concentrated on meeting the segment’s well-defined needs. As a result, the marketer’s marketing initiatives are more effective. As a result, less time and effort are wasted.

Differentiate Your Brand

Market segmentation will also help you to differentiate your brand from others. The effectiveness of your marketing, the right product to the right customers, exceeding the customer’s satisfaction, etc. can be best achieved when you have appropriate knowledge about the target market.

And, this enables market segmentation. As such, with quality in your marketing operation, you can create a different image of your brand in the market.

Related: Differentiated Marketing

Customer Satisfaction

One of the goals of market segmentation is to increase customer satisfaction. Since you are aware of customer needs, and selected the right market segment, you can increase customer satisfaction by working on their requirements and expectations.

Customer Retention

When customers are satisfied with your brand they are likely to be your loyal customers. In addition, you can offer after-sales service, recommend relevant product offers, introduce referral programs, etc. that further influence customers to think about your product.

Benefits To Customers

With market segmentation, the company is not the only one that gets benefits instead customers are also get benefited in different ways. Let’s say it divides the market into different consumer groups and seeks to design marketing programs that best fit the requirements of the selected segment. As such, the selected segments of the market are best served.

Related: Behavioral Segmentation

Cons of Market Segmentation

Although market segmentation provides various pros or benefits to the business, it is also not far from its limitations or cons. Some of the market segmentation cons are mentioned below:

Costly

Market segmentation is expensive in nature. With segmentation, in order to best satisfy your target customers you have to first invest a lot of effort and money in identifying and selecting the target market.

After selecting the target market, you further have to design products and marketing plans to meet their demand, this further increases your overall cost.

Time-Consuming

It is also time-consuming. Along with money and effort, you also have to invest a lot of time in searching, evaluating, and selecting the right market segment.

Small Segment May Not Be Profitable

When you select only one segment from the market, the market may be small. Although you may best satisfy the customers of your target market, due to its small size the demand of the market remains the same.

If such happens, it will prevent your business from growing. Alternatively, the target market should be big enough to generate more demands that will fulfill the objectives of your business.

In addition, you can choose more than one market segment to promote your products. But, here is also a problem you face is – you have to design different marketing techniques for different market segments.

Read Next: Market Segmentation Levels