Market segmentation may mean disintegration of customers in a defined market, over a defined level, in a defined period of time and on a defined product/service with an aim of complete satisfaction of their needs. Due to some reasons, organizations may choose to abandon the market segmentation and target marketing strategies. In this context, organizations base their argument on the basis of transactions not being narrowed to the interchange of goods, services and money, but including other resources such as time, energy and feelings (Kotler 1972). This assumption mostly occurs when there is monopoly of products, limited resources to carry out marketing and also lack of a big difference in the usability of a product over a range of customers segment. However, those organization which assume that their customers have a complete royalty, usually dig their own pitfalls in the business world unknowingly.
At the outset, lack of market segmentation and target marketing in an organization, may lead to reduction in profit levels; since some of the consumers may shift to other organizations that are due to compete. According to Joel Dean, customers’ needs should be met fully in terms of image or value need. In some parts of the world, Mercedes Benz may serve as a value need. This happens when the consumers in that area have a middle living standard. It may also serve as an image need, if the consumers belong to the high class segment. This is because anybody would afford the vehicle but the question is what is the image of the same vehicle in that given area of country? Therefore, a business is not capable of raising average prices and successively enriched profits. Organizations should therefore know that customers have different range of incomes and their sense in varying prices also varies.
In an organization where marketing segmentation is negated, a room for growth is so minimum. This is because the chances of customers hiking their trade one notch higher are very low. This happens to those that buy a preliminary product without any benefit like a lowered- price.
Organizations too tend to carry out in what may be called unnecessary market communications costs. Communication is expensive especially in the media advertisement. By segmenting markets, the target customer can be grasped more often and at lower cost (Enis & Roering 1980). Organizations therefore waste resources by communicating to everyone while they could have done it at a lower cost by communicating to only a targeted audience.
On returns of funds used in marketing, there is no an assurance to get favorable returns, and an organization might lose. This is because a well targeting and segmentation strategy, a business organization is able to meet more production and marketing costs. A carefully produced product earns a preference choice from consumers, and in every good produced good, there is an extra cost incurred.
Some products are so special that they require no substitutes (Murphy & Enis 1986). A failure to identify customer’s tastes and preferences leads to a customer loyalty loss and in the long run a business organization experiences a loss of royal customers. The organization fails to have long-lasting customers because it reaches a time that customers cannot consume substitute goods. Therefore, they shift to the business organization that offers those products that completely satisfy them without caring about the price difference between the current organization and the competing organization. To meet the customer’s needs, an organization an organization offering a variety of products depending on customers’ requirements to sell more merchandize, leading to maximization of profits. This leads to return of production and marketing costs.
References
Market Segmentation Company, derived from; http://www.marketsegmentation.co.uk/segmentation_tmsc.htm
Bruner, G.C. & Hensel, P.J. (1992) Marketing Scales Handbook. Chicago: American Marketing Association