Contemporary Business Studies - Academy of Knowledge Process ...

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International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.commass markets product into small products and introduce many products then they may satisfy theircustomers in a better way. If you introduce customer oriented products and target specific group ofcustomers and introduce product for that specific group then you may not only meet their needs but youwill also satisfy customers on minimum cost (Walsh, Hennig-Thurau, Wayne-Mitchell, & Wiedmann,2001).We may have more chances to win their satisfaction and market product easily. So now if we carefullyconsider reason for market segmentation is that this is a technique through which we try to focus on smallgroup and try to satisfy this group. Anything that we can do is to maximize organizational profit that ispossible only through increase customer number and satisfied existing customers. If we focused on smallnumber of peoples and try to introduce product as per their needs then it is better approach to satisfiedpeople (Debo, Toktay, & Van Wassenhove, 2005).Another reason of market segmentation is homogeneous needs of small number of group. 10 peoples havesame choice and needs as compare to group of 10000 peoples. The idea of Viable segments shows us howan organization is capable of satisfying large groups and captures the market. Let’s take an example ofgarments or cloth. Imagine as per mass production concept we introduce same color and size of garmentfor large number of peoples. Although this concept lead to economy of scale in production anddistribution but this may not consider gender , size, color and style of peoples (Yankelovich & Meer,2006). So this concept may be profitable for organization in short run but this may not satisfied customerso customer numbers may not increase. If we used second technique and introduce garments as percustomer age, color, size and style this may be increase cost of organization but this lead to customersatisfaction and in long run organization achieved goal of profit maximization and increase number ofcustomers however it is almost impossible to satisfy everyone because some time some individual maynot like the style and color of fashion but mostly peoples like this. other hand let’s we may considermarket segmentation in another style we design garment product for individual as per their age group thenpick the best suitable color make the best stitching that you like and which suits on you; size that fits toyour body etc. You immediate response is that this company design this product specifically for me and Ilove it you may introduce other friends this produce (Yankelovich & Meer, 2006).Another aspect of market segmentation is that it was much expensive so organization may not afford it.So the best approach is that organization considers both two extremes market segmentation and massproduction and focus on in between these two extremes. Market segmentation must be identifiable andeasily reachable and also affordable for customers. If you design specific product for individual and hemay not able to purchase and afford this then this may not be appreciable approach. Another idea forsegmentation is that we may produce mass production for those groups which have maximum samecharacteristics. For example we introduce fashionable jeans for teenagers in black color if our analysis isthat teenager of that city like black jeans. We may identify group on the basis of gender, age and income.It could be a psychographic variable (Activities, Interests, or opinions etc). We may also consider locationand weather of specific area and introduce product on the basis of this common characteristic(Hung &Tsai, 2008).Another example is that highly paid female employees of age 20-30 like shopping and like to purchaseproduct as per style and fashion. You have to target these groups with some preparation to promote ormarket your product/activity with proper communication that they would like (Armstrong, Harker, Kotler,& Brennan, 2009). Organizational approach must be that they introduce product for that group which canafford this product and able to pay reasonable price for it. This will definitely vary a lot amongst groups.Because this concept of market segmentation is based on qualitative measure of interests and needs. Priceof a product varies as per the basic economic concept of demand and supply. As per economic theory ifdemand of product is greater than supply of that product then this product price increases and this productmaximized profit of organization (Kotler, Keller, Brady, Goodman, & Hansen, 2009).2013©Academy of Knowledge Process46
International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comMarket segmentation is a concept that interests both customer as well as marketers. It is to treat them likethey are alike and most will be less than well satisfied. This is the trend today. Thirty years ago marketerswere crazy about mass marketing. The rationale behind mass marketing included the level you achieve inboth manufacturing and communication by reaching a large group of people with the same product andmessage. In recent years, however, marketers found that if the mass market was divided into smallersegments yet similar groups these smaller segments could be better satisfied.If you target customers basedon the similarity of the benefits that meet their needs, you will have more chances to win their satisfactionand market product easily. So now we get back to the rationale of market segmentation: it is easier tosatisfy a smaller group than a larger group. Anything that we can do is in turn to satisfy people better andis of direct benefit to our organization(Kotler, 2007).The smaller and less heterogeneous the group is, the easier it is to satisfy people in the group. That makesperfect sense because a group of ten is generally more homogeneous than a group of 1,000. The conceptof viable segments shows us how an organization is capable of satisfying large groups and captures themarket. Let’s take an example of garments or cloth (Homburg et al., 2012).Imagine no segmentation whatsoever exists. The result would be that we would have one garment foreveryone in the world without any considerations of size, gender, color, style, etc. We know immediatelythat the price would be low because of economies of scale in production and distribution. But we alsoknow that satisfaction would be minimal. It is almost impossible to satisfy everyone. Some wouldn't likethe color or style.On the other hand let’s assume the ultimate in segmentation: products designed for each individual. Youpick the cloth; discuss the style for stitching; color that you like and which suits on you; size that fits toyour body etc. You know immediately that you would love it - after all, it would be designed for youindividually. But we also know that it would be so expensive that we might possibly not afford it. Thebest is to fall somewhere in between these two extremes(Füller & Matzler, 2008).Practically, segments must meet three criteria: they must be identifiable, reachable, and affordable.Meaning how small can a segment be and still be worth targeting?First identify the individuals in a group on the basis of some common characteristics that they possess. Itcould be a demographic variable (Age, Gender, Income etc). It could be a psychographic variable(Activities, Interests, or opinions etc). It could be geographic (Based on location or climatic factors). Or,to make things really interesting and generic it could be some combination of these (Females, Age 20-30,with high incomes who are into fashion and styling, interested in shopping and who live in the samecity)(Füller & Matzler, 2008).You have to target these groups with some preparation to promote or market your product/activity withproper communication that they would like. You have to be able to produce an offer for product orservice the group want and can pay reasonable price for it. This will definitely vary a lot amongst groups.Because this concept of market segmentation is based on qualitative measure of interests and needs. Priceof a product varies as per the basic economic concept of demand and supply. If demand is greater thansupply, price can be high. If it isn't high, there will be a waiting list (Füller & Matzler, 2008).6.SIGNIFICANCE OF STUDY1. Facilitates concept of effective product strategy: Due to market segmentation, productdevelopment is well suited with consumer needs. This is because there is clear understandingthat if organization introduce product for specific customer group and target specific market.Market segmentation encourages the close matching. Eventually it gives satisfaction toconsumers and higher sales and profit (Hultman, Robson, & Katsikeas, 2009).2013©Academy of Knowledge Process47
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