ABSTRACT
The advantages of market segmentation have been widely discussed by academics and practitioners. Segmentation benefits can be achieved only if segment solutions are effectively implemented. Experience reveals that this is not always straightforward; a variety of operational, resource, data and communications barriers arise throughout the segmentation process. This chapter explains these implementation barriers, why and when they occur. Solutions are suggested for addressing such blockers to effective segmentation. The last two chapters of this book build on these issues and requirements with detailed recommendations for avoiding these problems. The aims of this chapter are as follows:
• To consider why the benefits of market segmentation can be difficult to achieve
• To describe the segmentation barriers that managers face and explain when they occur
• To introduce a range of practical approaches specifically designed to help corporations manage these barriers as they progress through the segmentation process
• To explain the workings of the various approaches to market segmentation, including unordered base selection, two-step, and multistep
The benefits of segmentation have been clearly established from research findings and anecdotal evidence. Unfortunately, this does not mean that implementing a new segmentation scheme is always a good idea, or that the process of implementation will be straightforward. Before committing to a particular set of selected segments, it is crucial to consider whether the benefits of doing so outweigh the associated costs. The kinds of changes that new segments bring include revisions to the product portfolio, modified or new channel, and salesforce practices, or even fully remodeled marketing programs. Clearly such changes come with a cost. Even assuming that there are clear and tangible benefits and the costs can be justified, making the most of those benefits can prove difficult. Managers are often quick to complain about the problems they face applying segmentation in practice. Sometimes these problems are minor, but in other cases these blockers cause the segmentation process to break down completely. A range of different problems has been reported. Operational constraints, poor managerial understanding of segmentation principles, process deficiencies, data difficulties, and resource problems are just a few of the problems mentioned. In this chapter these problems will be explored in more detail (Craft, 2004; Dibb and Simkin, 2001; Doyle et al., 1986; Hooley, 1980; Plank, 1985).
