Market Segmentation

As products and brands continue to proliferate, segmenting a market is more important than ever. Dividing a large group of relatively heterogeneous consumers into a set of smaller, more homogeneous segments makes perfect marketing sense. Employing the right segmentation analysis can impact both product development and communication strategy efforts.

Market Segmentation analysis should properly be viewed as a solution. The most important question to be addressed early in the research process is, “How do you plan to use the segments?” Having a clear understanding of what end results are required, and how these results will be used, will play critical roles in the ultimate success of any segmentation analysis.

The three primary challenges to a successful segmentation:

• Selecting the optimal variables for use in dividing a population into subgroups,
• Identifying the best statistical algorithms for the segmentation
• Presenting the results in a usable fashion.

Creating the segmentation model means sorting through demographics, usage behaviors, needs, interests, attitudes and more. Identifying the proper statistical algorithm means choosing from the collection of statistical and heuristic methods for determining segments that have been developed in recent years. And, impactful reports means bringing the results to life with clear, meaningful segment definitions and an action plan for operationalizing the segmentation solution.

In business-to-business markets the aim of market segmentation is to arrive at clusters of like-minded companies to enable the marketing/sales program to focus on the subset of prospects that are "most likely" to purchase the offering. Strong pressure exists to use segmentation in business-to-business markets to win a competitive advantage because often little differentiates one product from another. Segmentation therefore links strongly with a strategy to achieve a sustainable differentiated position.

RICOSHOCKS can help segment a client’s market and so enable an effective marketing strategy, leading to competitive advantage in the marketplace. We show our clients how to:

• Differentiate products/services in line with their customers
• Improve their competitive positioning
• Shape their product offering and pricing strategy to fit the markets with most potential
• Provide focus on their customers so they can:
  • Concentrate on providing profitable products or services
  • Target marketing and selling efforts