The Marketer's Handbook: Reassessing Marketing Techniques for Modern Business

SEGMENTATION

Application: Strategy, Communication, Positioning, NSD/NPD

The Concept

The segmentation of markets into groups of buyers which can be easily reached by suppliers is a powerful concept which has improved the profit of many businesses. It suggests that buyers can be grouped around common needs. Then, by customizing the firm’s offer to meet those common needs, suppliers can both gain competitive advantage and save costs because they are only addressing a portion of the market. Customer segmentation is one of the fundamental building blocks of marketing. It is the basis of: effective marketing communication, innovative offers, and appealing brands. The human insight which follows from deep knowledge of a group of human beings is the source of real competitive advantage. Segmentation, to some extent, is marketing.

There appear to be few developed and well accepted approaches to producing effective segmentation. Some advertising agencies arrive at it through creative insight, more logical minds through a review of patterns in data, while others observe and analyse behaviours. The process shown in Figure S.1 was published by Professor Malcolm McDonald (McDonald, M.H.B., 1998). In a very practical book he argued that marketers should first define and map their generic market. They should then take an objective view of the customers and their buying behaviour before doing detailed ...