Process of Segmenting

The process of subdividing the entire population into meaningful groups.

	Markets tend have measurable characteristics
		Homogeneous markets - A market in which a large proportion of the customers have similar needs.
				Heterogeneous markets - Markets made up of individuals or organizations with diverse needs for product in a specific product class.
		Clustered markets - Markets where groups of individuals share commons needs.
	Segmentation Steps
		Survey Step
			Survey Step is the step where data are collected.
			In this step you will want to collect data about the members of the market in order to categorize them into segments.
			Four types of data are routinely collected. These are called the Bases of Segmentation. (Follow link for more information on segmentation data)
			A diverse combination, across the data types, of accurate data is best.
		Analysis Step
			Analysis Step is the step where data are analyzed.
			Segments are formed in this step. All members of the population should be placed in a segment, even those that are not buyers of the product. (e.g. segmenting the population into gourmet coffee drinkers, coffee drinkers and those who do not drink coffee.)
			The data collected in the survey step can be subjected to very formal statistical analysis or can be used less formally to organize the population into segments. Typical statistical tools include cluster analysis and factor analysis.
		Profiling Step
			Profiling Step is the step where segments are described
			Once the segments have been developed it in important to describe the characteristics of the members of the segment to aid in targeting and positioning. (e.g. non coffee drinkers are typically xx-xx years old, have xx level of education, earn xx per year, etc.) The data used to form the groups is typically very useful in describing the groups.
			A profile is written for each segment. The Segment Profile is a descriptive report of the characteristics of the people within a given segment. (Follow link for more information on segment profiles)
	Segmentation is a useful process for understanding and approaching various target audiences. (e.g. Subdividing all prospective employers into groups based on company type or with positions with similar expectations (e.g. sales, marketing research, consumer service).
	Effective Segmentation
		Differentiable - Each group is clearly distinguished for the others. It would be easy to place a new customer into a group.
		Measurable - The group size can be estimated.
		Accessible - The members of the group can be reached with communication messages.
		Substantial - The group is large or important enough to justify the creation of unique communication and positioning approaches for this specific group.

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