Why is it important to estimate the size of product-market segments?

Question

Multiple select question.

It helps firms identify the monthly profit due to each segment.

It helps firms identify the segments with the greatest profit potential.

It helps firms identify competitors' shares of the market segment.

It helps firms identify any segments that have little or no profit potential.

Answer 1

Estimating the size of product-market segments is important for several reasons. Based on your options, the following selections are relevant:

• It helps firms identify the segments with the greatest profit potential.
  Understanding the size of segments allows firms to focus on those that offer the best opportunities for profitability.

• It helps firms identify any segments that have little or no profit potential.
  By evaluating segment sizes, firms can avoid investing resources in segments that are unlikely to yield significant returns.

While the other options are not as directly related to the significance of estimating segment size:

• It helps firms identify the monthly profit due to each segment.
  This is more of a function of profitability analysis rather than segment size estimation.

• It helps firms identify competitors' shares of the market segment.
  This can be a secondary outcome of analyzing market segments, but it's not the primary importance of size estimation.

So the correct choices are the first and the last options.