Why market need to be segmented?

Market segmentation offers the  following potential benefits to a business:

Better matching of customer needs: Customer needs differ. Creating separate products for each segment makes sense.

Enhanced profits for business: Customers have different disposable incomes and vary in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits.

Better opportunities for growth: Market segmentation can build sales. For example, customers can be encouraged to “trade-up” after being sold an introductory, lower-priced product.

Retain more customers: By marketing products that appeal to customers at different stages of their life (“life-cycle”), a business can retain customers who might otherwise switch to competing products and brands.

Target marketing communications: Businesses need to deliver their marketing message to a relevant customer audience. By segmenting markets, the target customer can be reached more often and at a lower cost.

Gain share of the market segment: Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice for customers and distributors.

There are various methods (or “bases”) a business can use to segment a market.