FREE online courses on Business Strategies - Business Strategy - Segmentation of Markets

 

It is imperative that companies pay careful attention to differences in customer needs among customer groups and not arbitrarily "lump" them together because:

The availability of sophisticated information processing technologies allows companies to identify unique bundles of customer characteristics and needs.

Competitors are becoming adept at precisely identifying even small--but strategically relevant--differences in customer needs.

 

Thus, companies are challenged to use the tools available to them to segment customers into competitively relevant groups, groups with unique needs or preferences. However, product or industry characteristics may make market segmentation difficult if not irrelevant in commodity-like markets such as polyester yarn, bulk chemicals or cement. Unfortunately, failing to make distinctions (where they are appropriate) may mean that the company attempts to be "all things to all people" and fails to focus on its key customer groups (and on satisfying their needs).