Benefits of market segmentation

A benefit of market segmentation is a reason why dividing a market into groups and aiming at a group helps a business. Build each benefit in three steps: identify it, apply it to the scenario, then analyse a specific consequence for the business. A benefit that would come from marketing in general, or a description of how to segment by age, income or location, scores nothing.

Building one benefit

• Identify the benefit: a better understanding of customer needs and wants, or enabling targeted marketing, are the strongest.
• Apply it to the details in the scenario: the age group aimed at, product features, location, promotion budget or marketing channel.
• Analyse a consequence: more sales, lower wasted marketing spend, stronger loyalty or better product decisions. Saying the business becomes more successful is too vague.

For example, an enterprise sells thorn-proof gardening gloves aimed at allotment holders over 50 in Norwich. Because it divided the market and studied that group, it learns they want padded palms and long cuffs. The gloves are then designed with those features. As a result, fewer customers return them as unsuitable, so they buy again, which can increase customer retention, and recommend them to other plot holders, which can raise sales.

Two benefits for six marks

A six-mark question needs two different benefits, because two versions of the same point are only credited once. Better understanding of needs and enabling targeted marketing are separate benefits; two versions of targeted marketing, such as targeted adverts and targeted emails, are not.

Keep each benefit linked to segmentation rather than marketing as a whole, and say that profits or market share has the potential to increase, since segmentation guarantees neither. Customer retention means keeping the customers you already have and encouraging repeat purchases, rather than only attracting new customers.