Which of the following is NOT a valid basis for market segmentation?

Correct option is B

The statement "Technology-Oriented Segmentation" is NOT a valid basis for market segmentation.

Market segmentation involves dividing a market into distinct groups based on common characteristics or needs. The segmentation must be meaningful, relevant, and actionable to help businesses target customers effectively. While technology might influence a market, it does not represent a direct and actionable segmentation criterion. Instead, it serves as a tool or medium to reach segmented markets rather than forming the basis of segmentation itself.

For instance, using technology preferences (e.g., smartphone users) might aid in understanding certain consumer behaviors but does not form an independent segmentation strategy like demographics or product attributes.

Information Booster:

Valid Bases for Market Segmentation

1. Customer-Based Segmentation: Focuses on demographic, geographic, psychographic, and behavioral characteristics of customers. Examples: Age groups, income levels, or lifestyle preferences.
2. Product-Related Segmentation: Segments based on product features, benefits sought, or usage patterns. Example: Cars segmented as luxury, economy, or sports models.
3. Competition-Related Segmentation: Divides markets based on competitors' strengths, weaknesses, or target audiences, enabling businesses to identify niches or gaps. Example: Differentiating from premium competitors by offering affordable alternatives.
4. Market-Specific Needs: Often blends criteria such as geographic locations, customer needs, or purchase behaviors, ensuring a robust segmentation strategy.

Key elements of effective segmentation: Measurability, accessibility, substantiality, and actionability.

Additional Knowledge:

(a) Customer-Based Segmentation:
This is a valid segmentation basis and one of the most widely used methods. It focuses on understanding the customer based on criteria such as age, gender, income, education, occupation, lifestyle, or buying behavior. Example: A business targeting millennials based on their tech-savvy nature and purchasing habits.

(c) Competition-Related Segmentation:
A valid segmentation basis, this involves identifying segments based on gaps or opportunities in the market overlooked by competitors. Companies use this strategy to position themselves against competitors by serving untapped needs. For example, a budget airline targeting price-sensitive travelers overlooked by premium airlines.

(d) Product-Related Segmentation:
This segmentation strategy divides the market based on the product’s features, benefits sought, or user status. Example: Toothpaste brands targeting consumers seeking "whitening" benefits vs. "sensitivity relief."