It is likely that the difficulty in linking segmentation to the performance of the organization is caused partly by the segmentation technique. It is assumed that segmentation can only be expected to have a positive effect on the underlying relationship between superior resources and superior performance, but additional problems may arise.
Research that was carried out Segmentation has led to a move from mass marketing to targeting specific groups, (Kara, 1997).
A mass marketing approach can no longer be suitable for customers’ needs.
By using segmentation, businesses can start to cope with this diversity, by grouping customers with similar requirements.
The implication is that segmentation allows for improved organizational performance by targeting specific segments of the market (Choffray and Lilien, 1978; Wind, 1978).
Segmentation gives businesses the opportunity to develop their strengths further.Through using segmentation analysis, it is possible to target and position markets more effectively.‘’Managers should be more aware of the limitations of segmentation studies.’’ Hoek et al (1996).By analyzing this data the companies are able to define different segments more accurately.Research indicates that a great deal of communication from companies is inappropriate or of no interest to them, Evans et al (1995).Advocates of segmentation suggest it is all about a better understanding of the customer, market, and appreciation of the competitive situation. segmentation, targeting and positioning raises two fundamental concerns: 1) Businesses which believe they are applying a market segmentation approach, may not necessarily be doing so; and 2) Marketers who are following the prescribed steps may not be achieving results, which can be implemented. Segmentation failure refers to situations in which the segmentation process has failed to generate solutions to the problem in hand.The following 3 themes need to be understood to why segmentation can fail: 1) "I don’t know if we segment the market, or who we really position ourselves against the competition. I think we are probably up-market, because we advertise in some very posh magazines" (Doyle et al., 1986).It may also in some circumstances be helpful to get help form outside (agencies) in the case of statistical analysis.Finally it is vital that a segmentation process is used which takes into consideration the company current situation and operational constrains which the business faces.Much time and money is invested in segmentation strategies, however evidence suggests that businesses have problems operating segmentation.There are three major debating questions, which arise regarding the failure of segmentation and how to overcome it. 2) If segmentation is such a good idea, why does it sometimes fail?