Ian Dunbar

Segment Checklist (Step 7)

To conclude this phase of the segmentation process, the final clusters in Step 6 are individually checked against size, differentiation, reachability and company compatibility If they pass this ‘reality check’, they can then proceed into the second phase of the segmentation process.

Forming Segments (Step 6)

This step discusses the procedure required for building the micro-segments back up into market segments. A summary of where this step lies in relation to the process as detailed so far appears in Figure 7.1.

Market Mapping (Step 1)

This first step in developing a segmentation structure for your market consists of two parts. The first requires you to draw a map of the market your business is segmenting and the second determines at which points on this map you should be developing segments.

What, Where, When and How (Step 3)

This chapter is Step 3 in the process of developing a segmentation structure for your market. It breaks down the current activity in the market into four categories: what is bought; where it is bought; when it is bought; and how it is bought.

Organisational Issues in Market Segmentation

The structuring of markets into clearly defined segments is undoubtedly a key input for the company’s marketing plan. Segmentation not only identifies the customer groups your company should focus its resources into, but also (through the detailed analysis required in a professionally conducted segmentation process) identifies vitally important elements of a successful marketing strategy Having an organisation which is both supportive of the process and supportive of carrying through the findings into the market place is therefore crucial.

Who Buys What, Where, When and How (Step 4)

The main purposes of this chapter are: to provide guidance on how to construct a customer base for the market you are segmenting by using the information put together in Step 3; to link this customer base to the profiling information recorded in Step 2.

Why it is Bought (Step 5)

Step 5 puts together the framework that will be used to compare each of the micro-segments with one another. This framework consists of the needs-based buying requirements of the market, identified by referring to the KDFs listed in Step 3 (Chapter 4).

Segment Attractiveness (Steps 8–11)

Now the segments in your market have been defined, it is essential that you determine how attractive each segment is to your company. This, along with an analysis of your competitiveness in each segment (Chapter 10), will help you decide how best to distribute your financial and managerial resources between them.

Company Competitiveness and the Portfolio Matrix (Step 12)

It can now be very tempting to simply focus on those segments obtaining the highest attractiveness ratings (despite the cautionary comments towards the end of Chapter 9), which could also be the chosen strategy of your competitors. This, however, fails to acknowledge that your company’s ability to be successful in each segment will differ according to how strong you are in it relative to the competition. This chapter therefore presents a format for you to follow which can be used to determine where your relative competitive strengths lie. It is the final stage of the segmentation process which is summarised in Figure 10.1.

Preparing for Segmentation

In this chapter, we discuss how to arrive at a definition of the market to be segmented and look at some examples which demonstrate the importance of successful segmentation. The chapter also presents a definition of segmentation before moving on to discuss a framework for looking at how companies currently define and segment their markets, some views on who should be in the segmentation team, the rules and advantages of segmentation, and then provides a summary of the segmentation process contained in this book.