¶ … Market Segmentation and Promotion Strategies in Achieving a Competitive Advantage
The importance of market segmentation relates to the need for companies to identify the specific attributes and needs of its customers in order to provide appropriate products or services. The importance of promotion strategies relates to the need to reach these market segments effectively with a company's marketing message. In order to gain further insights into these two critical marketing principles, this paper provides a review of the relevant literature concerning market segmentation and promotion strategies, followed by a summary of the research and important findings in the conclusion.
Market Segmentation
In order for companies to fine-tune their marketing efforts, they must first understand which segment of the market is most appropriate and how they can best reach this segment with their marketing message. In this regard, Michman (1999) advises that market segmentation is "a process of dividing a diverse market into groups of consumers with relatively similar characteristics, wants, needs, buying habits, or reactions to marketing efforts" (p. 4). Although every market segmentation process will be unique in some way, marketers typically segment their target market according to the most variables that are most salient to the products or services that are involved. For instance, Michman (1999) adds that in market segmentation, a larger market is divided into smaller, more manageable submarkets: "Consumers are grouped according to some variable or variables such as demographic, geographic, or psychological factors. Each submarket is evaluated by size, accessibility, behavioral differences, and degree of current need fulfillment" (p. 4).
There are a number of advantages that can accrue to the use of market segmentation for companies of all types and sizes. For instance, according to Michman, Mazze...
2). Irrespective of the size or type of enterprise that is involved, though, the market segmentation process can help identify what level of resources will be needed to satisfy this market segment. For instance, Michman and his associates (2003) also note that, "Effective market segmentation requires a sufficient number of customers, resources to meet the needs of the segment, and the ability to reach these customers" (p. 2).
Notwithstanding this general constraint, there are other advantages that are associated with the market segmentation process when it is properly administered. In this regard, Michman (1999) reports that, "Through market segmentation the firm can select the best target market, given its resources and the competitive environment, and cater to its needs and wants while reducing the costly errors and wasted expenditures inherent with less analysis" (p. 11). Despite this advantage, there is also a corresponding downside here as well. As Michman concludes, "The selection of a target market can be quite costly; in particular, if more than one target market is identified each one must be reached using substantially different techniques" (p. 11). Consequently, effective market segmentation also requires a careful analysis of which market segment is most suitable for the available marketing resources (Michman, 1999). Although effective market segmentation can help companies of all types and sizes better understand their targeted customers, there is also concomitant need for effective promotion strategies to reach these customers and these issues are discussed further below.
Promotion Strategies
A clearly defined promotion strategy can help clearly demonstrate the benefits of products or services compared to competitors' offerings. Promotion strategies…
