Segmentation – Part 2: Segmentation

See Part 1

Before getting into how one can think about
the various ways to practically segment a market, let’s first consider
some key issues and questions:

First: Why should you segment by benefits,
rather than the descriptors? There are three ways to answer this:

1. It’s the only way to have a clear message
   in the market.
2. It’s the only way to deliver what the
   customer wants.
3. Marketing academics have not been successful
   at segmenting the markets differently and still finding meaningfully
   different segments.

Does this mean that descriptors are
not used in marketing? No, they
absolutely are used, but for a different purpose.

To see this, consider the following very
simple example and how benefits are powerful and descriptors are useful.
Here we have two fictitious segments in the cereal market and two demographics
(young and old) and a product line (in colored bold) for each segment.
Notice how clean this is in terms of a message (i.e., the benefits) for
each segment. Note also how the descriptors are useful for the specific
products names.

Now, instead think about segmenting this
market based on age (a typical way people might segment this market).
What you would have is:

But what message will you have here; that
is, what are the benefits the old and young want? You wouldn’t
know!

Think this is not relevant
to your business market? Here’s another real world example.

Typically firms that sell chips
for cell phones (these are called DSPs) segment the market
like this:

But what benefits are big and small firms looking for. It
turns out that this market can be segmented (at the level
of the application) as follows:

The point of these two examples
is that by segmenting on the basis of age or size of firm
you would miss the fact (in the cereal example) that there
is a segment of both young and old people who want sweet and
sugary cereals. We should note that age segmentation is rampant
on the web and, as a result, the messages that internet companies
have are muddled.

In the case of the DSP chips,
segmenting by size of firm would miss the idea that within
a given firm there might be both applications that are innovative
(needing performance, support and upgradability) AND “quick
and easy” (needing low price and turnkey solutions).
Plus, by segmenting on size of firm you don’t know what benefits
to position your product on! That’s the reason so many B-to-B
companies have bland and amiguous positions in the market.

Next
Page

Originally Appeared Here