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MB0046- Q.1 A. Explain the six criteria for effective market segmentation


Answer: To be useful, market segmentation must exhibit some characteristics that are as follows:
1. Measurable and Obtainable: The size, profile and other relevant characteristics of the segment must be measurable and obtainable in terms of data. If the information is not obtainable, no segmentation can be carried out. For example, Census of India provides the data on migration and education level, but does not specify how many of the migrated employees are educated and if educated how many are in white collared jobs. If a company wants to target white color collared employees who are migrated to particular city, it will not able to measure the same. .
2. Substantial: The segment should be large enough to be profitable. For consumer markets, the small segment might disproportionably increase the cost and hence products are priced too high. For example, when the cellular services started in India cost of the incoming calls and outgoing calls were charged at Rs 12/minute. As the number of subscribers grew, incoming calls became free. Further growth of subscribers resulted in lowering tariffs for outgoing calls to the lowest level in the world.
3. Accessible: The segment should be accessible through existing network of people at an affordable cost. For example, Majority of the rural population is still not able to access the internet due to the high cost and non-availability of connections and bandwidth.
4. Differentiable: The segments should be different from each other and may require different 4Ps and programs. For example, Life Insurance Corporation of India needs separate marketing programs to sell their insurance plans, unit plans, pension plans and group schemes
5. Actionable: The segments which a company wishes to pursue must be actionable in the sense that there should be sufficient finance, personnel, and capability to take them all. 

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