Benefits or importance of market segmentation can be better explained by below stated points:

1. More Precise Definition of the Market:

Segmentation improves company’s understanding of why consumers do or do not buy certain products. Marketer can have very clear understanding of his consumers. He knows adequately about the market. He can formulate and implement marketing plan more successfully.

2. Maximum Customer Satisfaction:

Marketer can cater needs of customers more effectively. Market segmentation is relevant to the modern marketing practices. It ensures both maximum satisfaction to consumers and maximum sales to the company. Maximum consumer satisfaction is the master key to solve any problem. Marketer can cater needs of customers more effectively. Customers can have products as per their needs; they can get better products or services at lower costs.

3. Effective Marketing Strategy:

Market segmentation provides an opportunity to understand needs and wants of different segments of the market. This can help in formulating marketing mix/programme more meaningfully. Company can gain a maximum market response.

4. Essence of Modern Marketing:

Market segmentation strategy fits with modern marketing philosophy. If the marketer wants to satisfy his valued consumers, market segmentation is the only option. It is an essential condition for the successful modern marketing practice.

5. Improved Profitability:

On the basis of the study on needs of specific group of buyers, the products are manufactured. Company can attract distinct groups of buyers and can increase sales. An increased sale has positive impact on its profitability.

6. Optimum Use of Productive Resources:

Market segmentation leads to effective use of the valuable resources. Resources are allocated and used exactly as per market needs, avoiding mismatching between what marketer offers and what the market needs. So, valuable resources like man, money, material, space, technology, time, etc., can be utilized more effectively.

7. Benefit of Specialization:

It is easy to direct marketing efforts more clearly and specifically. Company designs its marketing programme for different products and for various groups of buyers. Specialization in production and marketing can offer a lot of benefits to the company.

8. High Competitiveness:

As a result of market segmentation, a company can treat its consumers more effectively than competitors. It improves competitive strength of the company. Company can respond strongly to the competitor; can prevent the entry of competitors; or can defeat competitors. Company can create and maintain the loyal consumers for long period of time.

9. Collection of Valuable Information:

Market segmentation process elicits a lot of valuable information for the company. Such information is instrumental for marketing research, product development, and evaluation of marketing activities. It is also useful for measuring effectiveness of sales and distribution facilities.

10. Identifying Market opportunity:

Market segmentation helps establish close relations with specific groups of buyers. Close relations facilitate a continuous interaction between consumers and company. Consumers inform the company regarding changes in their needs, wants, and habits on a continuous basis or whenever asked. Thus, it is easy for a marketer to project the future trends. He can identify opportunities to be available currently or in the near future, and can plan accordingly.

11. Benefits to Society and Nation:

Market segmentation, if taken objectively, can contribute to social welfare and national development. Basically, it is a consumer-oriented philosophy, and it results into a win-win-win approach, that is, company, society, and nation, all three, are benefited.

This can improve overall economic system by manufacturing the right products of the right quantity and quality for the right groups of consumers, made available continuously at the right price and place by the right distribution channel.

12. Benefits to Small Scale Industrial Units:

We know that small-scale industrial units can function on a limited scale of operation. They can have only the limited manufacturing and marketing capacity. Industries working on a small- scale basis can take advantages of market segmentation. By concentrating on special demand of specific group of a limited number of consumers, they can afford products and get profitable market easily. They can compete with the large industrial units, too.