MARKET SEGMENTATION WITH RELATION TO ITS THEORIES.

 

In order for one to successfully analyze the broad but specific topic that Market

 

Segmentation is, marketing and economics are the two core areas that ought to be

 

concentrated upon and conceptualized as they touch squarely on the topic. The

 

accompanying theories with which it comes will help us get a much clearer insight into

 

what marketing segmentation actually entails.

The theory of interest rates otherwise known as the segmented markets theory

 

argues that there exists an independence in the way short-term and long-term markets act

 

and that the maturity preferences of investors are fixed, and that there is a distinction in

 

the markets of short-term and long-term rates whereby each has its unique buyers and

 

sellers who are not interchangeable.[1]

The second theory and which I find equally as important to this topic as the first

 

one is the theory of liquidity preference which sees investors as risk-fearing and as a

 

result will ask for premium for securities that take long to mature. The premium will

 

Increase at a decreasing rate as a result of downward pressure from the interest-rates

 

decrease in volatility while at the same time maturity-term increases. This further

 

aggravates the fears of the investors.

Market Segmentation would not be studied exhaustively without a look at its

 

relation with the labor markets theory or the neo-classical economic theory where buyers

 

and sellers compete openly with one another and where its functions are similar to those

 

of other markets.[2] Workers would rather idle instead of working and there are differences

 

in human capital. Different jobs demand different qualifications and attract different pay.

Market Segments are identifiable from other segments due to their division into

 

parts of organizations and people with some or entirely same characteristics that make

 

them to ask for products, services and prices that are similar. This division into lots of

 

organizations and / or people with commonness in their needs forms the consumer group

 

This consumer group will equally have similarities in their demand for products, prices

 

and subsequently the function of these products. The above named characteristics thus

 

make the uniqueness of Market Segmentation from other segments: The division into

 

groups of consumers.

This segmentation has its positive as well as negative sides for the market in

 

terms of the different amounts the different consumer groups are charged.[3] The

 

marginalization of minorities on racial lines, which has its basis on the labor markets

 

segmentation theory, sees to it that much as the market would like to pay the workforce

 

different wages for the same job and same qualification, it also should be prepared to put

 

up with different prices for the same item to these differently paid workers. This is a

 

classical case of skewed market segments that exist in the market.

Recognizing customer needs is very crucial in the market segment. This ensures

 

that the seller survives the turbulent waters of the ever changing market trends. The

 

different segments with different groups of buyers asks for different groups of different

 

sellers. The basis of this assertion is the theory of interest-rates. The situation in this case

 

therefore demands that products and services be tailor-made so as to suit the demands of

 

the customers. For example if a customer prefers short-term interest-rates then the seller

 

will have to comply and provide exactly what the customers demand from him or else he

 

will get out of business. This implies that for short-term interest-rates customers, give

 

short-term interest-rates and for long-term interest-customers, give long-interests.

The fact that labor market segmentation theory does not focus on the individual

 

but rather groups as an entity while the theory of liquidity preference focuses on the

 

Individual and his relation and interest rates in the market segmentation is a pointer to

 

how markets, economic and labor, function is an intricate web with various people with

 

varying interests but all managing to function together in a mutual relationship

 

Individuals interact with the structures of institutions in the market segments no

 

matter what their form of employment is and whichever their gender or race although

 

there are primary and secondary segments which are of great consideration in the entire

 

market segmentation set-up. These are basically the key points in the very crucial field of

 

market segmentation, together with its theories that keep it going and which whose study

 

makes us get an insight into how they interrelate, how interest-rates dictate the investors’

 

plans while venturing into the tricky affair that that the investment and job market is.

 

The segmented market is therefore a highly competitive market and survival

 

tactics ought to be devised and employed in every step depending on the kind of

 

customer one is dealing with failure to which the seller will close shop. The

 

categorization of customers and workers on the basis of race in the segmented market is

 

very unfair not only to the worker who gets a pay lower than his correctly colored

 

counterpart, but also to the seller himself. This hurts business besides reducing the market

 

segments into a man-eat-man society. All the same, Market Segmentation provides an

 

opportunity to competitive able and willing people to succeed.

 

 

 

 

 

 

 

REFERENCES

 

Hillmet, (2002). Labor Market Integration and Institutions: An Anglo-German

 

Comparison; Work Employment Society.

 

Kuznets, (1955). Economic Growth and Income Inequality; American Economic Review.

 

Morrison, (1990). Segmentation Theory Applied to Local, Regional and Spatial Labor

 

Markets; Progress in Human Geography.