Problems if a market is not segmented

If a business does not segment its market, it treats every customer as if they belong to one big group. The product and the marketing are aimed at everyone, and that creates several problems.

A weaker competitive edge

A competitive edge is something that makes customers pick a business instead of its rivals. Competitors that do segment can aim straight at one group, such as keen gardeners or families on a tight budget, and shape the product around what that group wants. A business aiming at everyone often pleases nobody in particular, so rivals win the customers whose needs they understand best.

Loyalty and trust are harder to build

Brand loyalty is when customers keep coming back to the same brand. It grows when people feel a product was made with them in mind. If the marketing speaks to everybody, customers are less likely to feel recognised, so they are slower to trust the brand and less likely to return.

Vague messages and a stretched budget

With no clear audience it is hard to write a message that speaks to anyone in particular, so messages turn generic — lines like “great quality for everyone” that say little and appeal to few. A marketing budget is the money set aside for promotion, and it is used up faster because adverts reach plenty of people who will never buy.

For example, Crunchtime Cereals sells one plain cereal to all shoppers and advertises it with the slogan “tasty cereal for the whole family”. A rival launches a high-energy version for people with active lifestyles and a low-sugar version for older shoppers, and both sell well. Crunchtime’s slogan sounds dull beside them, and much of its budget pays to reach people who never eat cereal.

Not segmenting does not mean the business does no marketing at all. It still advertises, but the marketing is untargeted, so it is less efficient and less effective.