Market segmentation is the partitioning of a market of consumers according to some criterion in
order that marketing planning may be custom tailored to suit the unique needs of each segment. By
catering to differing characteristics possessed by several sub-markets, it is hoped that deeper overall
penetration of the target population will be accomplished. A prerequisite for a segmentation study is
the selection of a criterion most likely to account for differential response to the four controllable
marketing factors and on the basis of that criterion, partitioning the market, that is forming submarkets such that each sub-market is different in some way from the others. Ideally the differences
between these groups should be indicative of the unique manner by which each group responds to
differences in product offerings and/or to differences in the promotion strategy planned by the
marketer.
Segmentation research is typically carried out by consumer survey. The survey instrument
contains questions designed to take measurements not only on the segmentation criterion.usually
selected in advance, but also questions to measure other characteristics (variables) about the
consumer. Together, the discriminating criterion as well as the other characteristics make up the
total set of variables in the study. It is the average values on all these measurements that yield a
profile of characteristics for each segment, profiles providing some idea as to how the segments
differ. They offer clues as to how product design and promotional campaigns may be differentiated
for each segment.
How Many Segments?
The chief objective of segmentation is not merely to increase product acceptance, but to do so
efficiently. At the extremes either only one segment exists, that is, the market is presumed
completely homogeneous, or there are as many segments as individuals (completely heterogeneous).
How many should be specified? With fewer segments, the marketing task is simplified; appealing to
too many segments can become expensive and unwieldy. (In a Department of Transportation
campaign no less than 23 target audiences were identified for promoting the 55-mile-per-hour speed
limit; Yet one wishes not to overlook significant differences between
target subgroups.
Ideally, a segment should be sufficiently large for it to be worthwhile cultivating with a custommade marketing mix. If too few customers make up a submarket, it usually will not pay to modify
the product, price, promotion, or distribution to suit those individuals. The optimum number of
segments, then, is a compromise between the largest number accounting for actual group differences
and the smallest number containing a worthwhile audience. Usually, clusters of segments can be
combined to form a smaller total number of segments.
Criteria for Segmentation
The crucial aspect of this process is the selection of the criterion upon which the segmentation
scheme is to be based. There is a large body of literature dealing with the choice of segmenting
criteria (see for example, Frank, Massy and Wind 1972). Of all the criteria upon which consumers
differ, which should be selected for a particular segmentation strategy? Virtually every product
suggests one or more criteria and one selects the criterion believed to be most relevant to the focus
product/situation. For example, to promote "Buy union label" one might segment on the basis of
preference for American goods versus imports; the marketer of legalized gambling could use some
attitudinal measure as a relevant criterion; a fair housing study might segment on frequency of job
relocation.
In an empirical study of the social product, mass transit, Lovelock (Lovelock and Weinberg 1978)
segmented a market based upon various travel characteristics. Church nonmembers have been
segmented into three classes called resisters, disinterested and uninformed (Kotler 1980). A study in
India showed that interest in birth-control devices could be determined by examining external
features of the dwelling occupied by the family and Senator George McGovern's 1972 presidential
campaign strategists found that Volvo owners were a fruitful source of campaign contributions
(Dionne 1980). Finally, physical features such as terrain and rivers could play a role in segmenting
for what has been called spatial diffusion of innovation:
First, anything that moves must be carried in some way. Secondly, the rate at which some things
move over geographic space will be influenced by other things that get in the way. Thus we must
consider initially the carriers and the barriers that can influence particular movements . . . of ideas
spreading through a group of people .
Sometimes a total market of consumers is segmented not on one criterion, but by a broad
category defined by several criteria. The aim is to find different groups to address and to then plan
different means of approaching each.
In sumary, an effective segmentation program must ensure that:
1. The segmentation criterion selected is appropriate for the particular product.
2. Individuals belonging to different segments are likely to react differently to one or more
marketing policy instruments.
3. Those within a given segment demonstrate relatively homogenous behavior.
4. The number of segments formed is such that it is economically feasible to reach the most
important target groups.
5. Segments be sufficiently large and reachable so as to warrant individualized cultivation.
6. The program will lead to modification or manipulation of one or more marketing-mix
components. In other words, the newly identified segments should be addressed by modifying
the product
order that marketing planning may be custom tailored to suit the unique needs of each segment. By
catering to differing characteristics possessed by several sub-markets, it is hoped that deeper overall
penetration of the target population will be accomplished. A prerequisite for a segmentation study is
the selection of a criterion most likely to account for differential response to the four controllable
marketing factors and on the basis of that criterion, partitioning the market, that is forming submarkets such that each sub-market is different in some way from the others. Ideally the differences
between these groups should be indicative of the unique manner by which each group responds to
differences in product offerings and/or to differences in the promotion strategy planned by the
marketer.
Segmentation research is typically carried out by consumer survey. The survey instrument
contains questions designed to take measurements not only on the segmentation criterion.usually
selected in advance, but also questions to measure other characteristics (variables) about the
consumer. Together, the discriminating criterion as well as the other characteristics make up the
total set of variables in the study. It is the average values on all these measurements that yield a
profile of characteristics for each segment, profiles providing some idea as to how the segments
differ. They offer clues as to how product design and promotional campaigns may be differentiated
for each segment.
How Many Segments?
The chief objective of segmentation is not merely to increase product acceptance, but to do so
efficiently. At the extremes either only one segment exists, that is, the market is presumed
completely homogeneous, or there are as many segments as individuals (completely heterogeneous).
How many should be specified? With fewer segments, the marketing task is simplified; appealing to
too many segments can become expensive and unwieldy. (In a Department of Transportation
campaign no less than 23 target audiences were identified for promoting the 55-mile-per-hour speed
limit; Yet one wishes not to overlook significant differences between
target subgroups.
Ideally, a segment should be sufficiently large for it to be worthwhile cultivating with a custommade marketing mix. If too few customers make up a submarket, it usually will not pay to modify
the product, price, promotion, or distribution to suit those individuals. The optimum number of
segments, then, is a compromise between the largest number accounting for actual group differences
and the smallest number containing a worthwhile audience. Usually, clusters of segments can be
combined to form a smaller total number of segments.
Criteria for Segmentation
The crucial aspect of this process is the selection of the criterion upon which the segmentation
scheme is to be based. There is a large body of literature dealing with the choice of segmenting
criteria (see for example, Frank, Massy and Wind 1972). Of all the criteria upon which consumers
differ, which should be selected for a particular segmentation strategy? Virtually every product
suggests one or more criteria and one selects the criterion believed to be most relevant to the focus
product/situation. For example, to promote "Buy union label" one might segment on the basis of
preference for American goods versus imports; the marketer of legalized gambling could use some
attitudinal measure as a relevant criterion; a fair housing study might segment on frequency of job
relocation.
In an empirical study of the social product, mass transit, Lovelock (Lovelock and Weinberg 1978)
segmented a market based upon various travel characteristics. Church nonmembers have been
segmented into three classes called resisters, disinterested and uninformed (Kotler 1980). A study in
India showed that interest in birth-control devices could be determined by examining external
features of the dwelling occupied by the family and Senator George McGovern's 1972 presidential
campaign strategists found that Volvo owners were a fruitful source of campaign contributions
(Dionne 1980). Finally, physical features such as terrain and rivers could play a role in segmenting
for what has been called spatial diffusion of innovation:
First, anything that moves must be carried in some way. Secondly, the rate at which some things
move over geographic space will be influenced by other things that get in the way. Thus we must
consider initially the carriers and the barriers that can influence particular movements . . . of ideas
spreading through a group of people .
Sometimes a total market of consumers is segmented not on one criterion, but by a broad
category defined by several criteria. The aim is to find different groups to address and to then plan
different means of approaching each.
In sumary, an effective segmentation program must ensure that:
1. The segmentation criterion selected is appropriate for the particular product.
2. Individuals belonging to different segments are likely to react differently to one or more
marketing policy instruments.
3. Those within a given segment demonstrate relatively homogenous behavior.
4. The number of segments formed is such that it is economically feasible to reach the most
important target groups.
5. Segments be sufficiently large and reachable so as to warrant individualized cultivation.
6. The program will lead to modification or manipulation of one or more marketing-mix
components. In other words, the newly identified segments should be addressed by modifying
the product
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