Little of what is best in marketing theory and practice works without correct market segmentation. It is one of the most fundamental concepts in marketing and your choice of which approach to adopt will directly affect the impact of segmentation on your business.
Market segmentation, correctly applied, is about understanding the needs of customers and, therefore, how they decide between one offer and another. This insight is used to form groups of customers who share the same or very similar value criteria. A company is then able to determine which groups of customers it is best suited to serve and which product and service offers will both meet the needs of its selected segments and outperform the competition.
The primary objective of segmentation, therefore, must be how to win and retain the customers you want to serve. This underpins the approach taken by The Market Segmentation Company (tMSC).
'Market Segmentation' definition
The process of splitting customers, or potential customers, in a market into different groups, or segments, within which customers share a similar level of interest in the same or comparable set of needs satisfied by a distinct marketing proposition.
Marketing proposition; the 'tools' or means available to the organization to improve the match between benefits sought by customers and those offered by the organization so as to obtain a differential advantage. Often referred to as the four Ps, this is usually the appropriate mix of product features, price, promotion and place (service and distribution). For the customer, this manifests itself as benefits, cost, relevant image and convenience; in other words, a customer value proposition.
A customer's view of segmentation - meet my needs!
Customers segment themselves ...