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Danger of Oversegmenting a Market

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Segmentation is the process of breaking a population down into smaller groups and marketing to it. Is it possible for a small business to oversegment its market? How might that be dangerous?

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It is important to first understand the purpose of market segmentation. When a business feels that it is not possible to effectively serve the needs of a market through undifferentiated marketing, that is, offering a single product or service to the total market, then it is necessary to consider the option of differentiated marketing where you need to offer different products for different customer groups. So it is important to do a careful analysis of the market to find out if there is a real need of differentiated marketing and market segmentation is ...

Solution Summary

Market segmentation is a useful marketing strategy when companies sell their products or services to large heterogeneous markets. However, over segmenting markets can cause some problems and may not produce the desirable results. Therefore, such decisions need to be evaluated carefully specially by small businesses.