Market Segmentation is the process of division of target market on the basis of customers, gender, behavior, lifestyle and so on. It is essential because segmentation helps business to distribute differentiated product lines on the basis of specific market needs. To perform market segmentation, the firm should interpret functionality desired by consumers, identify segments that require unique approach and inquire about competitors. Various analysts recommend different approaches to segment market. Market segmentation is often referred to as STP approach i.e. segmentation, targeting and positioning. It means, first we introduce differentiated product or service in market then we target specific customers whose demands need to be satisfied and finally, we build a reputation for ourselves. A Branding company evolves through proper market segmentation.
Now, we are going to discuss about the evolution of the branding company via market segmentation.
Allocation of Marketing Budget
Every company allocates specific amount of funds to develop its business. When differentiation is done effectively, it helps business to distribute funds focusing on particular business segment efficiently. A firm can recover easily from its losses and starts to grow its business. Only through research, we can realize needs of customers and introduce different range of products and services. This in turn helps us to direct right product or service towards right set of customers and achieve profit. So, it is essential to properly allocate Marketingbudget to establish the best branding company.
In case, product or service becomes obsolete, we can remove it from market. This helps us to discontinue loss made by firm. If only a single product range is positioned in market and it fails then firm will get ruined completely. So, business should always focus on diversification of its product or service range as diversity reduces risk.
Increases Sales Volume
The segment with higher demand should be satisfied first. This helps business to increase sales volume and make profit. Sometimes, a firm manufactures excess product, which may not be sold and ultimately leads to loss. None of the branding company in India or abroad can prosper if it cannot meet demand of its consumers. A firm should properly track demands of particular segment and manufacture product in the same rate. Plus, the firm should always maintain a level of safety stock and continuously review demand for a product or service. More resources can be allocated to market segments where sales opportunity is better.
Increases Market Share
Market penetration shows popularity of a specific product or service category to increase market share. A business can penetrate market effectively by segmentation or diversification of market needs, new product development, expansion of business to foreign lands and so on. Research has shown that a mobile manufacturer acquired market share to become theBest branding company in Delhi through efficient diversification.
Helps to Tackle Competition
A business should always strive to introduce full range of products directed to differentiated target segment. Gaps present in market serve as a scope for business to expand. By performing proper research, firm can capture untapped market segments. Thus, branding company expands to become market leader.