Chapter 8 Notes Market Segmentation: A market is (1) people or organizations with (2) needs or wants and with (3) the ability and (4) willingness to buy. Market segment is a subgroup of people or organizations sharing one or more characteristic that cause them to have similar product needs. Market segmentation is the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups. Market segmentation plays a key role because: (most importantly) nearly all markets include groups of people or organizations with different product needs/ preferences. The Importance of Market Segmentation: Market segmentation helps marketers define customer wants/ needs. Because segments differ in size, this helps accurately define marketing objectives and better allocate resources. Criteria for Successful Segmentation: Marketers segment markets for 3 important reasons: 1) Segmentation enables marketers to identify groups of customers with similar needs and to analyze these groups. 2)Segmentation proves marketers with information to help design marketing mixes specifically matched with the characteristics and desires of one or more segments. 3) Segmentation is consistent with the marketing concept of satisfying customer wants and needs while meeting the organizations objectives. To be useful, a segmentation scheme must produce segments that meet 4 basic criteria:
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