What are the limitations of market segmentation?
Market segmentation has some limitations. Market segmentation is when a company divides the population based on certain factors such as geography, age, and income levels. One disadvantage of this strategy is that the segment that may be chosen may be too small to sell enough products to make a profit. A second disadvantage is that the consumers in the market segment could be misinterpreted. Market research may indicate that the population wants a certain product, but it may not take into consideration that there may be different kinds of that product.
There are other limitations that also exist. Businesses must determine the cost of targeting a population. Businesses also need to know how much competition already exists in that market. If there is a lot of competition, adding one more product may not be successful or worthwhile. The business must be sure that the consumers know what they want. If the consumers are confused or uncertain, that could be problematic. Finally, there will be no market research for new products. The business will constantly have to monitor how the product is doing by marketing it to the masses and adjusting as needed.
There are a number of limitations of market segmentation that can make the practice impractical in certain instances. Some of them include:
- Not all markets can be divided into identifiable segments. It is not always possible to segment a market based on observable characteristics of the consumers.
- Segments may not be large enough to be worth targeting.
- Segments are not always reachable via distinct channels. If a significant portion of a given segment does not all watch a given TV show or visit a given website, there is no way to reach that segment effectively.
- Segments may change. If they do, the effort and resources put into creating a specific marketing plan for a segment will be wasted.