By Carl Da-Costa-Greaves
What is segmentation?
If we think about the mass population as one big blob (the market). Within this ‘blob’ there are chunks. Certain chunks look like each other, act like each other and share the same needs. If you then identify the biggest chunks based on their similar needs and wants then you’ve effectively ‘segmented’ them from the masses.
General Segmentation Methods:
• Demographic; Stage in life, Geographic, Geo-demographic, Age
• Psychological; Motives, Attitudes, Values, Opinions
• Decision Making Process; Extended problem Solving, Limited Problem solving, Routine Purchase, Impulse, Involvement
• Decision Making Unit; Individual, Family, Business,
• Social Factors; Family, Reference groups, Culture, Sub-culture
• Relationships; Societal impact, Close, Distant, Stakeholders
Types of segmentation;
Consumer segmentation, Socio-economic Groupings, Lifestyle, Organisational and
When to use Segmentation?
The whole purpose of segmenting a market is to allow your marcomms and sales promotions to focus on the prospects that are “most likely” to purchase your products and services. Branding and marketing campaigns can then be tailored to the segment, rather than using a one size fits all approach.
What does it achieve?
• Focus efforts on those segments where the greatest sales, profitability or awareness can be generated.
• Can adapt products to the customers in target segments through a greater understanding of needs.
• More satisfied customers – communication and products are more relevant to them.
• Create greater differentiation leading to greater standout from your competitors.
• Homogeneous – everyone within it is similar (but won’t be identical)
• Distinct – groups are recognisably different from each other
• Identifiable – can assign customers to segments
• Accessible – communication and service delivery
• Profitable – every customer could be a segment, but would not be profitable
• Actionable – have the resources to exploit
• Stable – not likely to change in the short term
1 Audit and analyse the organisation’s current position, capabilities, objectives and constraints.
2 Identify the segmentation variables and segment the markets.
3 Develop profiles of each segment.
4 Evaluate the potential and attractiveness of each segment.
5 Select the target segment(s).
6 Identify the positioning concept within each target segment.
7 Select and develop the appropriate positioning concepts.
8 Develop the marketing mix strategy.
• Market segments need to be evaluated and ranked for possible targeting.
• Evaluation is typically based on:
– Size of segment
– Growth prospects
– Competitive pressure
– Fit with company objectives