What A Market Segmentation Should Answer

• What is the profile of the core targets, in terms of attitudes, behaviors, demographics and media consumption (in the case of consumer products/services) or company size, SIC classification, revenues, etc. (in the case of business-to-business services)?

How does this market segmentation capture a customer’s “profit” potential? That is, describe how and why they are the most profitable targets for my brand/product or service?

• What is their growth potential/lifetime value? What is their “price sensitivity”? Are they reachable via lower cost media vehicles? Do they shop in distribution channels in which my brand/product or service can be found? Are they currently “open” to buying my brand
  (or easily lured from competitors)?

• What product or service attributes or benefits are most salient to my target customers?
• Are there any “unmet needs” that I might be able to address with my product or service?
• How do I inoculate the target from competitive messages or activity?

• Via what media vehicles?
• Via which distribution channels?

• What key messages resonate with the target audience?
• What brand or service attributes and benefits are most important and competitively distinct to my target audience?

Common Mistakes in Segmentation Research
A market segmentation that answers the above questions is a powerful and actionable segmentation. Over the past 10 years, we have begun to compile a list of top 10 most frequently heard complaints about segmentation
research. Surprisingly, little has changed from our original list 10 years ago. There are solutions, however, and we have outlined a few that will help avoid these common pitfalls:

1. “Our last segmentation was based on the premise that there are groups of the population with differing needs that could be marketed to distinctly. However, the segmentation outcome produced groups that
   were not all that different from each other in terms of their category spend and interest in our brand. So, how do I pick which is my target segment for my brand?”
   
   Segmentation solutions need to be focused on providing solutions that find targets who have high economic value for your brand/service based on the spending in your category, interest in your brand and long-term growth potential.
   
   
2. “Our custom segmentation identified groups of people that differed on only one dimension, demographics. We then conducted another segmentation that found customers that were different in terms of only attitudes. Does this mean I need to conduct multiple segmentation studies to understand the whole market? How do I get to ONE segmentation that is most predictive for my brand?”
   
   We find that the most robust segmentations use a combination of variables to describe the market – and these produce the most actionable and understandable segmentation profiles.
   
   
3. “Most segmentation research focuses on current customers. But what about likely prospects? Where and how can a segmentation study help me grow business among potential buyers of my brand?”
   
   Best-in-class segmentation should address both customers and prospects to define the entire marketplace potential of your product or service.
   
   

The full Paper is available in PDF format

No part of these materials may be reproduced in any form without written permission.

Clancy, Kevin J.; Shulman, Robert S., The Marketing Revolution, A Radical Manifesto for Dominating the Marketplace. New York: HarperBusiness. © 1991.

Clancy, Kevin J.; Shulman, Robert S., Marketing Myths That Are Killing Business. New York: McGraw-Hill. © 1994.

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