SMA Kristen Cilacap

Segmentation is not the same as target marketing. The purpose of market segmentation is to divide heterogeneous groups of consumers into smaller parts of specific consumers that have similar characteristics. The business organization must define meaningful marketing objectives by choosing which groups will be served.

We will determine the marketing goals, business organizations need to measure the size of the segment and accurately informed choice about which segment will be served. Business organization must not select segments that are too narrow or too broad. If the market segment is too narrow then it will not provide adequate business benefits. If the market segment is too large then it will be difficult to enter that market, less effective in allocating resources. If the market is not well targeted then the company resources be wasted because the costs outweigh the profits.

Setting the Segments Size Accurately

Setting the segment size accurately based on the capabilities and resources will improve organizational productivity, performance, and efficiency. Large companies can select high-volume segment because they have the organizational competence and enough amount of resources to successfully manage and maintain the business. While small business organizations can choose a small market segment that provide adequate return on the organization’s performance.

Estimating the magnitude and size of the market segment can help the business organization to decide which segments are worthy tho enter. Large companies can choose the segment with a large sales volume that provide enough profits. Large companies must not choose small segments that give small

returns. On the other hand, small firms usually avoid large segment because they require great amount resources and difficult to manage and maintain.

Forecasting the Segment Growth

Small segment can grow and become big market. It is crucial for business organization to forecast the market potential for such market segments. Small market segment which is not played by many competitors can be a potential market segment that can give significant growth factor to intelligent small business organization.

Profit Forecasting in Choosing the Target Market

No matter how interesting a segment, if not in accordance with the organization’s core competencies and resources, it will be very difficult to play in these segments profitably. There are some threats that make a particular segment should not be taken. Do the calculations carefully before choosing the segment. Here are the factors that determine the choice of segments:

1. High Level of Competition

If the level of competition was too tight, aggressive, and too many players of these segments, the high cost required for entry, promotion, and won the competition. Energy and cost of business organization to be successful in these segments is not proportional to the profits earned. In addition, at the level of market competition is too high already happened many kecederungan price war, war ads, and new product development costs are expensive.

2. The Arrival of New Competitors

You may have selected the segment that is not a lot of competitors, or even a tough market segment to enter, but not impossible that new entrants have higher capacity and financial capability had better get into the segment that you enter it.

3. Product Substitution

Changes that occur with advances in technology also can create change in consumer behavior. A segment becomes unattractive both in actual want any potentially because of the many replacement products are not direct competitors to the segments to enter. Products / services this replacement could affect the price level and the potential profits to be learned. For example currently emerging training programs or online courses that do not require class attendance indirectly to a competitor for the traditional courses that require classroom attendance. If the online courses more easily process the amount of actual course participants who require classroom attendance will also decline.

4. The Increase of Buyer Bargaining Power

If the level of competition tightened, and the number of products offered by each business organizations both volume and its variations are also increasing, then the buyer’s bargaining power will be stronger. This is evident in the computer retail business where the price factor can make a difference. The number of companies that offer products that function and the quality is not much different could create confusion for customers in choosing so they will choose based on price trends. The ability to offer consumers would increase as consumers become concentrated and organized, the product does not match the price, price-sensitive consumers, the product is not differentiated, and sale of systems of business organization is weak.

5. The Increase of Provider Bargaining Power

A segment is not attractive to be entered when the provider increases prices or lower product quality. Providers of goods tend to be powerful if: the goods on offer had little substitute for, the product is raw materials, and prices fluctuate rapidly. To overcome this thing to do is establish a good relationship with the provider or using alternative sources and materials. For example the basic needs such as kerosene, cooking oil and rice prices often fluctuate because the number of stocks that also fluctuates.