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MKT 5815 Chapter 5 Analysis Brendan O’Neal

MKT 5815 Chapter 5 Analysis Brendan O’Neal...

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Brendan O’Neal MKT 5815 October 22, 2010 Chapter 5 Analysis Dr. Gene Landrum Hodges University
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Segmenting the Business Market and Estimating Segment Demand Market segmentation is considered to be one of the most fundamental concepts in the field of marketing. It was first introduced into study by academia and recognized in practice by Smith in 1956; he distinguished market segmentation from product differentiation as a marketing strategy (Sausen, et. al., 2007). A market segment is a group of present or potential customers (individuals or organizations) that have a characteristic in common that is relevant in explaining and predicting a response to a manufacturer’s change in the current marketing climate or stimuli to which they are exposed (Hutt and Speh, 2009). To be considered a market segment, the target segment must fit a set of criteria: the segment must be distinct from other segments in the market; this is so that the differentiation in segments is able to be measurable and identifiable. Also, the segment must be accessible; it must be reachable through distribution channels and have a means of communication. The segment must also be substantial; its size should be able to justify the resources that an organization will devote to catering to the segment. The segment must also have unique needs from other segments within the market. This is to justify the need of differences in offerings throughout the market. The segments will need to respond differently to the unique products offered. Lastly, the segment must be durable; the segment must be able to maintain stability in a changing market and be able to minimize the cost that comes with frequent changes (Hutt and Speh, 2009).
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