The institutional affiliation
Once the market-segment options were identified, the company should evaluate its choice carefully to ensure that the segment corresponds to the firm’s purposes. To be useful, market segments must be rated favorably on five major criteria, namely, measurable, substantial, accessible, differentiable and actionable ones (Monger, 2013).
Before planning a business strategy, it is important to know the measurable characteristics, purchasing power and size of existing sales in the targeted segment. The market research may be based on the age groups, population of geographic regions or other social categories. Otherwise, it will be difficult to assess whether the segment brings some profit.
The segment should be substantial by matching objectives and resources of the company. A strategy of the market segmentation is a cost-taking meaning when one must carefully take into account not only the number of potential customers, but also their purchasing power to make the company profitable.
Accessibility of the segment is about the ability to be reached and served fast, as well as on time. Each company determines its own level of efficiency according to its work and financial resources. It is pointless if you cannot reach your segment effectively through marketing communication, as you will be simply unable to deliver information about your product or company.
Each defined segment must be easily differentiated from others, namely, have its unique market characteristics. When receiving an e-mail or watching an advert on TV, there must be clear which part of the market it is aimed at. Though such selective approach usually leads to higher costs, besides a correctly targeted segment usually pay off in equally high purchase rates.
Actionability is the main criteria meaning that the segment is unsuitable, unless there are necessary resources to cater for its needs. In other words, the segments should correspond to the effective marketing programs which are going to be formulated and implemented (Monger, 2013).
The successful market segment should meet all these criteria; otherwise, the success of the company will be hindered. In addition, there are modern concepts aimed at broadening the frames of the market and segment orientation.
The concept of the selective specialization, also known as multistage coverage, is a strategy helping to diversify the risk. The company set focus on a number of segments each of which is potential, attractive and appropriate, even though there may be no synergy among them. If there is a loss in market share for one segment, there is a chance to concentrate on the other market segments, unless there is a new strategy to regain the market share. For example, if the company X manufactures family, sport or mini cars, it obviously concentrates on different age and social groups which represent separate market segments.
Niche marketing is a rare strategy to compete within a narrowly defined consumer group fulfilling particular needs. This market segment consists of a small number of consumers with common needs and characteristics. For small companies, niche marketing is a guarantee of security if they decide to compete in the segments which appeal to larger and better financed organizations. Niche marketing has lots of examples on the Internet, for example, informational sites catering to a very specific group of people who have very specific needs as tutoring Japanese language or babysitting toddlers for parents. Thus, the niche market on the Internet is used to refer to a category of people who look for solutions to ordinary problems online. There are more and more marketing specialists that no longer concentrate on large segments, but decide to go to specific niches (Internet Blog, 2010).
References
Internet Blog. (2010). The Concept of Niche Marketing and Niche Marketers. Retrieved 30 March 2016 from http://www.warriorforum.com/blogs/mrtrabajo/11343-concept-niche-marketing-niche-marketers.html
Monger, Brian. (2013). Effective Marketing Segmentation is More Than Simplistic Demographics. Retrieved 30 March 2016 from ttps://smartamarketing.wordpress.com/2013/05/29/effective-marketing-segmentation-is-more-than-simplistic-demographics/
