Market Segmentations That Matter
How do you segment your market for effective target marketing? Forming segments around demographic (age and region) and psychographic factors ("values, tastes, and preferences)" is useful for developing branding, positioning, and advertising in consumer markets. However, it is not useful for predicting purchases in particular product categories. What determines purchases is how different buyers relate to products and product categories, claim D. Yankelovich and D. Meer ("Rediscovering Market Segmentation," Harvard Business Review, 2/06, p. 124). Understanding how buyers relate to products is critical in b2b marketing.
Segmentation Helps Identify the "Underserved, the Dissatisfied," and "New Purchasers"
When seeking to identify segments that are "interested, "susceptible," and potentially "lucrative," consider your company's overarching strategy and its most important strategic challenges. Use qualitative and quantitative research to uncover attitudes that are conducive to buying. Find out what buyers are doing, and analyze sales data. Then, use laboratory simulations and field studies to anticipate responses to new products or untested features.
Segmentation schemes must fit your purpose. Make sure that:
Segmentation Schemes Should Reflect the Significance of the Decision
Yankelovich and Meer recommend that you tailor your segmentation scheme to reflect the importance of the transaction or the decision that is involved. Determine where your decision is on a decision spectrum, and segment accordingly:
The goal of a segmentation scheme is to gain a better understanding of your customers. A segmentation scheme is not an end in and of itself.
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