6.Advanced Techniques of Market Analysis: A Brief Overview of Some Useful Concepts
6.3 Segmentation
Market Segmentation
Market Segmentation is classification of customers into homogenous groups that allow development of efficient product differentiation strategies to exploit these segments.
Effective Market Segmentation
Six segmentation criteria determining the effectiveness and profitability of marketing strategies
1. Identifiability
It must be possible to measure
2. Substantiality
It must be large enough to earn profit
3. Accessibility
It is possible to reach potential customers via the organization’s promotion and distribution channel
4. Stability
It must be stable enough that it does not vanish after some time
5. Responsiveness
It responds consistently to a given market stimulus
6. Actionability
It is useful in deciding on the marketing mix
Market Segmentation:
Classification of Segmentation Bases
| General | Product-specific | |
| Observable | Cultural, geographic, demographic, and socio- economic variables |
User status, usage, frequency, store loyalty and patronage, situations |
|
Unobservable |
Psychographic, values, |
Psychographics, |
Benefit Segmentation
- „…The Benefits people seek in products are the basic reasons for the heterogeneity in their choice behavior, and benefits are thus the most relevant basis for segmentation.”
(Haley 1968)
- „… Benefits are preferred segmentation basis for general understanding of a market and for making decisions about positioning, new product concepts, advertising, and distribution because of their actionability.“
(Wind 1978)
Market Segmentation:
Evaluation of Segmentation Bases
| Identifiability | Substantiality | Accessibility | Stability | Actionability | Respon-siveness | |
| 1. General, observable | ++ | ++ | ++ | ++ | – | – |
| 2. Specific, observable | ||||||
| Purchase | + | ++ | – | + | – | + |
| Usage | + | ++ | + | + | – | + |
| 3. General, unobservable | ||||||
| Personality | ± | – | ± | ± | – | – |
| Life style | ± | – | ± | ± | – | – |
| Psychographics | ± | – | ± | ± | – | – |
| 4. Specific, unobservable | ||||||
| Psychographics | ± | + | – | – | ++ | ± |
| Perceptions | ± | + | – | – | + | – |
| Benefits | + | + | – | + | ++ | ++ |
| Intentions | + | + | – | ± | – | ++ |
Benefit Segmentation Paradox
When segmenting on the basis of the benefits consumers want from a particular product/service category, an analyst should make a clear distinction between basis variables that are important in separating the total sample into homogenous segments and those that are important because they are the benefits or features that the respondents in each segment want most. It is too easy to assume that these are the same. Sometimes they are, but often they are not. The “drivers” may not vary among different segments, i.e., may have no discriminant power at all, e.g., price, quality, etc.
