Why is it important for a firm that is launching a new product into the marketplace to segment their market?

Why New Firms Need to Segment Their Market

Firms today recognize that they cannot appeal to all buyers in the marketplace , or at least not to all buyers in the same way . Buyers are too numerous , too widely scattered , and too varied in their needs and buying practices . Moreover , the companies themselves vary widely in their abilities to serve different segments of the market . Instead , they must design strategies to build the right relationships with the right customers . Rather than trying to compete in an entire market , sometimes against superior competitors , each

company must identify the parts of the market that it can serve best and most profitably . This is the reason why when launching a new product , the firm must try to identify market segments , selecting one or more of them , and developing products and marketing programs tailored to each

By dividing a market into distinct groups with distinct needs characteristics , or behaviors , the firm could effectively cater to their specific needs . For example , if anyone wants to launch a t-shirt printing business , they should market their products as attractive to the youth market (age specific segmentation . Also , market segmentation reveals the firm 's market segment opportunities later on . The firm now has to evaluate the various segments and decide how many and which segments it can serve best . In evaluating different market segments , a firm must look at three factors : segment size and growth , segment structural attractiveness , and company objectives and resources (Kotler Armstrong 2005 ,

. 165 . For example , after segmenting the market to the youth market , the company has realized they are more popular to the teen girls (gender specific segmentation , then they could decide to enhance their products that would be appealing to this specific market segment

Reference

Kotler

Armstrong , G (2005 . Marketing : an Introduction , 7th edition . New Jersey , USA : Prentice-Hall...