The Marketing Segmentation as a Means of Organizational Performance

1.1        BACKGROUND OF THE STUDY

It is usually impossible for a particular organization to have a comprehensive knowledge of all the customers that made up a particular market, weather the market is industrial, consumer service, (Coles 2007). This is the situation most time because customers are usually widely spread, many and heterogeneous in what they buy and how they buy.

So rather that dissipate energy trying to serve all the customers that make up a market without having a comprehensive knowledge about any particular set of these customers, an organization without a good vision is expected to study the various sets of customers with a view to identifying the particular set that could be served most effectively and profitably and settle for some. One basic tool required to get this done effectively in the market segmentations, which Onayemi Shikan (In Sanyaolu, 2002) defines as the process of dividing a market into distinct sub set of customers, each of which can be considered as a target market with common heads and can be theory approached with a distinct marketing mix, action or programme.

Marketing segmentation is defined according to many textbook as the fundamental theory suggests that business adopting a market segmentation approach can enhance their organizational performance, (kotler, 2007) Market segmentation is grounded in economic pricing theory which suggests that profits can be maximized when pricing level discrimination between segments (Frank et al 1972). One of the reasons for the widespread acceptance of the approach is the belief that organizations cannot normally serve all the customers in a market. The leading textbook by Kotler, (2004) States that “Customers are too numerous and diverse in their buying requirement.” The implication here is that segmentation helps to homogenize market heterogeneity and coincidentally allows for improved organizational performance by targeting specific segments of the market.

Thus, customers who have been aggregated according to the similar buying needs and behavior will tend to demonstrate a more homogeneous response to marketing programs. (Choltray and Lillien, 1978; Wind 1978) Modern marketing literature identifies a range of benefit for business, pursuing a segmentation approach. The underlying logic is that segmentation can enhance marketing effectiveness and improve an organizations ability to capitalize on marketing opportunities (Beans and Ennis, 1987, Weinstein 1987).

This is partly due to the fact that segmentation builds on an excellent understanding of customers and competitors which can lead to fewer direct confrontations with competitors and the design of more suitable marketing programmes. Research has also show that segmentation also helps businesses to allocate financial and other resources more effectively (Mc Donald and Dunbeir, 1995).

Segmentation encourages businesses to play to their strengths by focusing their resources on the most attractive area of the market, and consequently earn better profits, consisting these claims, market segmentation, if could therefore be said that managers who are familiar with the concept and its application should achieve better performance than their counterparts who are neither familiar with it nor its application. This is the bases for the research in this project work which consider the view of staff aluminum warehouse and system limited, Lagos.

Aluminum warehouse and system limited was registered in July 2004 and commenced operation in February, 2005. The company is in the business of structural and architectural aluminum works with the unique capability of meeting the continuously changing requirement of her customers.

The company is a major player in the aluminum segments of the Nigerian building industry with a reputation for delivering world class quality services to a wide range of clients.

Also of particular significances are her direct and eventful relationship with such international supplier’s like Nigalex, Towerrex, and first aluminum that provide her the distinct advantage of prompt and efficient delivery to her clients.

The company presently has a total of 165 staff in its headquarters and sales outlets within Lagos and its environs.