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.
Survey Step is the step where data are
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)
combination, across the data types, of accurate data is best.
Analysis Step is the step where data are
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.
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 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).
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.