Market segmentation is wide defined as being a complex process consisting in two main phases:
- identification of broad, large markets
- segmentation of these markets in order to select the most appropriate target markets and develop Marketing mixes accordingly.
Everyone inside the Marketing world knows and speaks of segmentation yet not many truly understand its underlying mechanics, thus failure is just around the corner. What causes this? It has been documented that most traffickers fail the segmentation exam and start with a narrow mind and a bunch of misconceptions such as "all teenagers are rebels", "all elderly women buy the same cosmetics brands" so on. There are many dimensions to be considered, and uncovering them is sure as shot an exercise of creative thinking.
The most wide employed model of market segmentation comprises 7 stairs, each of them designed to encourage the trafficker to attach to a creative approach.
STEP 1: Identify and name the broad market
You have to have black-marked out by this moment what broad market your business aims at. If your company is already on a market, this can be a starting point; more options are available for a new business but resources would commonly be a little limited.
The biggest challenge is to find the right balance for your business: use your experience, cognition and sens to estimate if the market you have just far-famed earlier is not too narrow or too broad for you.
STEP 2: Identify and make an inventory of potential customers' inevitably
This step pushes the creative thinking challenge even farther, since it can be compared to a brainstorming session.
What you have to work is what inevitably the consumers from the broad market far-famed earlier might have. The more possible inevitably you can come up with, the better.
Got yourself stuck in that stage of segmentation? Try to put yourself into the place of your potential customers: why would they buy your product, what could possibly trigger a buying decision? Answering these questions can help you list most inevitably of potential customers on a given product market.
STEP 3: Formulate narrower markets
McCarthy and Perreault suggest forming sub-markets around what you would call your "typical customer", then aggregate similar people into this segment, on the condition to be able to satisfy their inevitably victimisation the same Marketing mix.
Start building a column with dimensions of the major need you try to cover: this will make it easier for you to decide if a given soul should be enclosed in the first segment or you should form a new segment. Also create a list of people-related features, demographics enclosed, for each narrow market you form - a further step will ask you to name them.
There is no exact formula on how to form narrow markets: use your best judgement and experience. Do not avoid asking opinions even from non-Marketing professionals, as different people can have different opinions and you can commonly calculate at to the last-place degree those items most people agree on.
STEP 4: Identify the deciding dimensions
Carefully review the list resulted form the previous step. You should have by now a list of need dimensions for each market segment: try to identify those that carry a deciding power.
Reviewing the inevitably and attitudes of those you enclosed inside each market segment can help you work the deciding dimensions.
STEP 5: Name possible segment markets
You have far-famed the deciding dimensions of your market segments, now review them one by one and give them an appropriate name.
A good way of naming these markets is to depend on the most important deciding dimension.
STEP 6: Evaluate the behavior of market segments
Once you are done naming each market segment, allow time to consider what other aspects you know about them. It is important for a trafficker to understand market behavior and what triggers it. You might notice that, piece most segments have similar inevitably, they're still different inevitably: understanding the difference and acting upon it is the key to accomplish succeeder victimisation competitive offerings.
STEP 7: Estimate the size of each market segment
Each segment far-famed, named and studied during the previous stages should finally tend an estimate size, even if, for lack of data, it is only a rough estimate.
Estimates of market segments will come in handy later, by offering a support for gross revenue forecasts and help plan the Marketing mix: the more data we can gather at this moment, the easier further preparation and scheme will be.
These were the stairs to segment a market, concisely presented. If performed aright and thoroughly, you should now be able to have a glance of how to build Marketing mixes for each market segment.
This 7 stairs approach to market segmentation is very simple and practical and works for most traffickers. However, if you are curious about other methods and want to experiment, you should have a look at computer-aided techniques, such as cluster and positioning.
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