ABSTRACT
Many approaches are possible for creating market segments, ranging from systematic survey-based quantitative studies of consumers or business customers to simpler qualitatively deduced solutions. Sometimes these approaches use an organization’s existing customer classifications as the basis; in other cases they start afresh and are not constrained by the existing status quo. This chapter presents a mix of contrasting segmentation approaches, each of which proved workable for the organization concerned. Its aims include the following:
• To examine how a quantitative survey of consumers’ usage, attitudes, buying behavior, and characteristics leads to market segments
• To consider the macro-micro approach to developing market segments, using existing customer groups as the basis
• To appreciate how straightforward qualitative research can intuitively reveal the existence of market segments
• To become aware of the organizational and operational considerations for conducting market segmentation
Marketing textbooks tend to present a rather simplistic approach to carrying out market segmentation. Typically, they explain that consumers or business customers should be surveyed, similar consumers or customers grouped together into segments, decisions made about which segments to target, and then sales and marketing programs
developed to address the requirements of the selected target market segments. This is a reasonable process to follow, yet in practice it can be difficult to operationalize. Most organizations have preexisting target market strategies, sales force structures, channels to market, contractual arrangements, customer service operations, and reporting structures that rarely relate to emerging market segments. It is often difficult to restructure these activities around new-look segments. Worse, if radically new customer-derived market segments are imposed on organizations, they may be resisted by sales, marketing, and operational personnel, and cause confusion within the distribution channel.
