"Consumer is always a rational human being. Hence economic basis for segmentation is the most appropriate method." Do you agree with this statement? Give reasons.

 Segmentation refers to a process of bifurcating or dividing a large unit into various small units which have more or less similar or related characteristics. 

Market segmentation is based on the assumption that all the potential customers are not identical and that the firm should address their needs with appropriate product Land other marketing strategies or else should concentrate on only one single segment and tailor the strategy accordingly. Marketers establish the basis to segment the market.

Income level, decides the overall buying power of a person and the type of goods purchased. In India there are only about 10 per cent people who can buy anything. There is 28 per cent of population which cannot buy even necessities as they are below the poverty line and the rest are middle income class. Thus, there are four classes —Persons Below the poverty line, low income group, middle income group and high-income group.

The need of these classes differs widely and is an important and effective method of segmentation. A middle class or upper middle class may inspire for low priced car while high income group may settle only for expansive model. The middle class may buy a scooter, small refrigerator while low income group person may not be able to afford it. The income level is very important criteria for market segmentation and has been used effectively by marketer.

1. Focus of the Company: Segmentation is an effective method to increase the focus of a firm on market segments. If you have better focus, obviously you will have better business. Numerous automobile companies have started focusing on small car segments. This is nothing else but a company changing its focus for better returns. Thus companies base their strategy completely on a new segrnent which increases its focus and profitability.

2. Increase in competitiveness: Naturally, once your focus increases, your competitiveness in that market segment will increase. If you are focusing on youngsters, your brand recall and equity with youngsters will be very high. Your market share might increase and the chances of a new competitor entering might be low. The brand loyalty will definitely increase. Thus, market segmentation also increases competitiveness of a firm from a holistic view.

3. Market expansion: Geographic segmentation is one type of segmentation where expansion is immediately possible. If you have your market strategy on the basis of geography, then once you are catering to a particular territory, you can immediately expand to a nearby territory.

In the same way, ifyou are targeting customers based on their demography (Ex — reebok targets fitness enthusiasts) then you can expand in similar products (Ex. — re&k expanding with its fitness range ofclothes and accessories). Segrnentation plays a crucial role in expansion. You cannot expand in a territory when you have no idea of which segment of customers you will be meeting.

For PDF copy of Solved Assignment

Any University Assignment Solution

WhatsApp - 8409930081 (Paid)