The requirements for effective market segmentation are as follows:
The size, needs, purchasing power, and characteristics of the customers in the segment should be measurable. Quantification should be possible.
The segments should be differentiable. There must be the clear-cut basis for dividing customers into meaningful homogeneous groups. They should respond differently to different marketing mixes. There should be differences in buyer’s needs, characteristics, and behavior for dividing into groups.
The segment should be reachable and serviceable. It should be accessible through existing marketing institutions, such as distribution channels, advertising media, and sales force. There should be middlemen to distribute the products.
The segment should be substantial. It should be large enough in terms of customers and profit potential. IT should justify the costs of developing a separate marketing mix.
It should be actionable for marketing purposes. Organizations should be able to design and implement the marketing mix to serve the chosen segment.