The marketing concept suggest that to achieve organisational goals and be more profitable, an organisation should focuses its efforts on developing marketing mixes that best meet the needs of the consumer. However, since consumer needs within a market vary, one marketing mix could not adequately satisfy the needs of the entire market. Targeting marketing is one of the most important ideas in modern day marketing. Under the idea, the marketer divides the market into subgroups with similar needs and wants or preference, it will then be possible to tailor marketing mixes to specific segments, better meeting their needs. .
As figure 1-1 shows, targeting marketing involve three major steps- market segmentation, market targeting and market positioning. Market segmentation is the first step that dividing a market into subgroups of consumers who are homogeneous in their response to a particular marketing mix. The second step is market targeting, in this step, the company select one or more target segments based on evaluating of each segment's attractiveness. The final step is market positioning, the company formulates marketing mix for each target segments and develops competitive positioning for its products. .
Figure 1-1 Steps in market segmentation, targeting and positioning.
Market segmentation can be defined as the ¡§ the process of dividing a potential market into distinct subsets of consumers with common needs characteristics and selecting one or more segments to target with a distinct marketing mix.¡¨ Companies generally can not serve entire markets in a effective manner, so rather than trying to compete in an entire market, companies identify subsets of customers whose needs best match their offering. .
The organisation can segment the market in many way, but a number of criteria should be met in order to developing effective segments for market strategy.