You must realize that you have certain groups that are prospects for goods or services. Not everyone is a prospect for every good, as evident in the car business where there are many different companies producing different kinds of cars, which all serve basically the same purpose of transportation. In order to achieve maximum efficiency you must control your product mix. Productions runs should therefore reflect customer s needs and desires for best use of resources. Thus, you want to efficiently match your products to your customer s desires to ensure advantages over your competitors.
Companies have two main options when it comes to segmentation.
They can either segment the market or the can treat the entire market as potential customers for its goods or services. Very few if any companies can successfully use the latter option, which if used the firm would use undifferentiated marketing. Despite the fact that undifferentiated marketing is not very successful, one flaw many companies have when they decide to use segmentation, is they still treat everyone as potential customers, rather than selecting a specific group, which is likely to be a prospect for their product. Recognizing the diversity in the marketplace is probably the most important factor to successful segmentation. Thus, segmentation is the development of differentiated marketing strategies to meet the desired needs of marketplace.