Market Segmentation: How to Do It and How to Profit from It, Revised and updated 4th Edition

Chapter 4

Determining the scope of a segmentation project

Summary

This chapter looks at the most crucial and complex issue in marketing, namely, how a market is defined. Until this is clearly understood, issues such as market share, the identification of target customers and their needs, and even the recognition of competitors, will continuously cause difficulty. It is the essential first step of your segmentation project, as illustrated in Figure 4.1.

Figure 4.1 The segmentation process – Step 1

Although it is not an unfamiliar term, it is important to note what we mean when we use the term ‘market’. A ‘market’ refers to a particular need that customers are seeking to satisfy. It is not product or service specific, and is looked at from the customer’s perspective clearly describing what the customer intends the product or service to do for them. Defining a market this way ensures you consider all the competing products and services that are capable of satisfying a particular need.

This chapter is organized as follows:

• A discussion about the geographic scope
• Using the needs-based approach to define the market being segmented
• The difference between wants and needs
• Care in using products and product categories to define markets
• Striking a meaningful balance between a wide definition and a narrow definition
• Using distinct price bands and using different end-uses or applications ...