|Process of Market Segmentation|
4. Selection of the market segment
Evaluation of Market Segment
1. Segment size and growth
2. Segment structural attractiveness
- Competitors: Market segments may be more competitive and may also be less. The market segments where there are already more competitors become less attractive. Similarly, if the competitors are more capable and aggressive, such market segment also becomes less attractive.
- Substitute products: If a market segment has to face the competition with present and future substitute products, such market segment becomes structurally less attractive because a company becomes unsuccessful to earn profit.
- Power of buyers: The power of buyers also affects market segment. If bargaining power of buyers is more than sellers’, they give pressure to decrease price, increase quality and increase other supply related services. As a result, attractiveness of market segment lessens.
- Power suppliers: If powerful suppliers are in market segments, such segments become less attractive, because they become able to control price, quality and quantity of the products.