TABLE OF CONTENTS There are a number of reasons why organizations undertake segmentation (Doyle, 1994):
Meet consumer needs more precisely In a generic market customer's demands will differ; by developing a distinct marketing mix for each consumer segment an organization can offer customers better solutions for their needs.
Increase profits Different consumer segments react in contrasting ways to prices; some are far less price-sensitive than others. Segmentation allows an organization to gain the best price it can in every segment, effectively raising the average price and increasing profitability.
Segment leadership In any particular market the brands that have dominant shares of the market will be highly profitable. Their market leadership gives them economies of scale in marketing and production and they will also have established access to distribution channels. Small companies or new entrants in a market are unlikely to be able to gain leadership; they can however take a dominant share of a particular market segment. This focus can allow them to develop a specialist marketing mix to satisfy the needs of the consumers in that group while at the same time building a competitive cost position relative to other companies in that segment.
Retain customers Providing products or services aimed at different consumer segments allows an organization to retain that customer's loyalty as their needs change. As an individual moves through life their needs in financial services will change. For example, young single individuals may need a minimum of credit and banking facilities and...
