The reasons for segmentation are mentioned below:

(i) Better Satisfy Customer Needs and Wants: By segmentation, you can find customer needs and wants. Each one has their own wants and needs which are diversified and that should be handled in a diversified way in order to fulfil them. Segmentation helps in identifying customer needs and preferences which creates the demand for a product in the market. If you find a solution for each of the segments, you will be able to make the company successful. As customers grow older, their preferences keep changing, and if you are able to make the segmenting cycle flow, you are able to keep the customer satisfied till his final days which is a great way to retain the customers for a long period of time.

(ii) Better Communication: To make the segmentation effective, messages should be sent to the customers directly. Since each of the customers has different wants and needs, messages should be sent in that way in communicating the solutions to the customer separately. When you target the mass customers alone, you may miss some targeted customers where your message is not yet delivered to them. Many companies spent huge amounts of money on advertisements which most of the customers won’t buy. Through segmentation, customers can be reached with a marketing message which solves their individual’s problem, which also costs very less to the company.

(iii) Opportunity for Growth: Segmentation helps in identifying the customers who would not buy the product normally. By segmenting, you can find out those customers, where you create your own attractive niche that may be the solution for them. If such unique problems are identified, companies are able to solve the problem, meanwhile helping in improving the sales of the company, which helps the customers upgrade from the current product to a new version, where this cycle continues, will be profitable for the company.

(iv) Increased Innovation: With segmentation, the smaller segments with similar needs and wants can be identified. Mainly traditional customers fall under this category, but identifying new needs can stimulate innovative ideas to solve new problems. When both the problem and new innovative solutions meet, premium charges can be implied which customers would not hesitate to buy and the market is sustained.