Better Resource Allocation:
Since segmentation’s objective is to serve customers better and earn better profits, the firm would like to allocate resources more efficiently. Thus, market segmentation will lead to better marketing.
iv. Competitor Analysis:
To compete better in the market one must have complete knowledge of the competitors, the segments being served by them, and their working practices. It enables to know the segment which our organisation can serve better. If this kind of information is overlooked we may find ourselves in head-on collision with large competitors. Especially, the medium-sized firms can grow rapidly through strong positions in specialised market segments.
By insightful segmenting and targeting, companies set the stage both for serving customers well and minimising the impact of competition. Thus, segmentation is a source of competitive advantage and enhances awareness of external market trends and competition.
v. Taking care of dynamic environment:
Customer segments, which are prone to frequent changes due to changing environment, can be taken care of in strategic marketing planning. In fact, large companies with resources at command are leaving mass marketing.
vi. Focus Marketing Communication:
Segmentation establishes commitment and single mindedness with the organisation: one vision, one voice, harmonised messages. Segmentation allows an organisation to identify media channels competent to reach the target group. Young women interested in fashion are more likely to read ‘Famina’. Thus marketer can select this medium instead of going in for mass media.