Segmentation is a tool to divide the market into different segments, in which each segment can have its own way of approach. The world we are living in today is still working with segmentation, but the question arises whether segmentation does not fall short on multiple aspects.
Nowadays, businesses use segmentation data in their business models (Beltman and Peelen, 2013). It is a way to select a certain group of people (a segment) and to specially focus on those people. A suited approach could be developed and implemented to reach this group. Nevertheless, there are some limitations in using segmentation, which require further investigation.
Firstly, segmentation data only tells us what has happened, rather than it gives the reason why it has happened (Bennett and Seaton, 1996). The data can be used for certain products that have been bought by certain groups for a previous period, but it does not give an explanation why these certain groups have purchased that certain product. It is therefore impossible to make a good forecast for the future.
Secondly, a segmentation analysis tell us what is, rather than what it could be. It does not highlight the possibilities for the future (Bennett and Seaton, 1996). This segmentation data is of some extent, but it does not forecast the future and therefore it is quite useless. It gives information about the present situation but it does not show any other forecasts for the future.
Thirdly, the assumption that people from the same geographic or demographic base have the same needs, is an unrealistic assumption (Bennett and Seaton, 1996). This segmentation data kind of forgets the individuals inside the segmentation groups as well. The fact that everyone is unique and has different wants and needs, needs to be more recognized. Nowadays, many organizations seem to have problems in approaching every customer separately. The reason for this seems to be that the costs to reach every customer separately, are higher than the benefits. Therefore most companies fall back on segmentation which certainly focusses on a group of people, but leaves individual wishes unattended (Beltman and Peelen, 2013).
As a conclusion it can be noted that there are multiple limitations to segmentation data. Firstly, segmentation data only tells us what has happened, rather than it gives the reason why is has happened, secondly a segmentation analysis tell us what is, rather than what it could be and thirdly people from the same geographic or demographic base do not have the same needs. Although these limitations show that segmentation data will never be perfect, segmentation is a way to create a great approach to certain segments.
Beltman, R., Peelen, E. (2013). Customer Relationship Management. Pearson. Retrieved at 1 october 2016.
Bennett, M.M., Seaton, A.V. (1996). The Marketing of Tourism Products: Concepts, Issues and Cases. Thomson. Retrieved at 30 september 2016. Retrieved from: https://books.google.nl/books?id=Zs9VZcfBjccC&printsec=frontcover&hl=nl#v=onepage&q&f=false