Market segmentation pertains to the division of a market of
consumers into persons with similar needs and wants. For instance, Kellogg's
cereals, are marketed to children. Crunchy Nut Cornflakes are marketed to
adults. Both goods denote two products which are marketed to two distinct
groups of persons, both with similar needs, traits, and wants. In another
example, Sun Microsystems can use market segmentation to classify its clients
according to their promptness to adopt new products.
Market segmentation allows for a better allocation of a
firm's finite resources. A firm only possesses a certain amount of resources.
Accordingly, it must make choices (and incur the related costs) in servicing
specific groups of consumers. In this way, the diversified tastes of
contemporary Western consumers can be served better. With growing diversity in
the tastes of modern consumers, firms are taking note of the benefit of
servicing a multiplicity of new markets.
Market segmentation can be viewed as a key dynamic in
interpreting and executing a logical perspective of Strategic Marketing
Planning. The manifestation of this process is considered by many traditional
thinkers to include the following; Segmenting, Targeting, and Positioning.
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