Market segmentation process

It is difficult to determine what will segment a market into different segment based on different benefit tradeoffs; there are some useful ways of working out the process of segmentation for any product in the market. In any event however, this is typically a reiterative process (i.e. trying one way, than other)

“One way to start the process is to look at various benefits and think about whether there are groups of customers who would care about different clusters of these benefits”

You may begin to think about segmenting a market on following bases.

Usage: Often how customers use the product can result in their making tradeoffs across different benefits. For Example: light users and heavy users of a product often care about different benefits.

Application: customers who apply a product in a mission critical way often care about different benefits (for business buyers this could be a way central business, but a cook may use a product that is central to a recipe as well)

Prior experience with the product category: often denoted as experts and novices, these different types of prior experience usually highly correlate with different needs.

Often in customer markets, prior brand loyalty, buying situation (Work vs. entertainment), or some times lifestyle (as in the case of many cares) can be the basis of segmentation.

If you don’t have good data to help you, the best you can do is to begin trying to segment the market using some priori idea (Such as using usage), and then checking it to see if the segments really care about different benefits. If not, try again using different segmentation bases , and reiterate. You might look at combinations of different bases as well.

You will know that you have a good segmentation of it meets the criteria that the customers in the different segments make tradeoffs differently. A good segmentation will also meet other criteria such as:

  • The segments are measurable: that is , you can identify the size of the segment
  • The segments are reachable: that is, you can reach the segment by media.

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