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MY ARTICLES

WHY SHOULD I SEGMENT?

First of all, what is segmentation? I would define segmenting as the process of subdividing a market into financially viable grouping of individuals sharing common characteristics.

What are the characteristics used to define groups of individuals? Without being exhaustive, here is a list of some of the features that are commonly used by marketing managers and polling firms:

  • For consumers (Business to Consumer)
    • - Geographic market (country, region, district, etc.)
    • - Demographic market (gender, age, household composition, etc.)
    • - Socio-economic market (income, occupation, education, etc.)
    • - Lifestyle (activities, interests, habits, etc.)
    • - Norms and values (philosophy, opinions, etc.)
    • - Motivation (ready to use certain products or services)
    • - Customer value (does that the customer buy a lot or a little?)
    • - Ambassador (is the customer a company/product spokeperson?)
    • - Purchasing habit (frequency, quantity, quality, etc.)
    • - Need (information, accessibility, availability, etc.)

  • For the business to business world
    • - Geographic market (buyers’ concentration, growth possibility, etc.)
    • - Type of customer (company size, industry, business volume, etc.)
    • - Customer value (how much they buy, what they buy, quantities, profitability, loyalty, etc.)

Now let’s look at the second part of our short definition: the segment must be financially viable. In some cases an extreme segmentation may be accomplished and a group of individuals would contain one or a few individuals/companies. Is this viable? It depends on your market and the business volume you do with each client. As an example, if you are a massage therapist, and each customer buys an average of 5 massages a year at $ 60 each, a segment with a few customers is not very advantageous. But, if you sell commercial passenger aircraft, there are very few buyers for this type of products, you need to understand the nature of each of your potential client’s business and the transaction volume is very important so that a small group size would be profitable. 

Why do you need to segment? Why cannot the same message be put across to everyone? Why adapt the presentation of a product/service that is the same? These are all excellent questions. We do it to personalize our messages, select the proper communication channels and shape our products/services in order to meet our customers’ needs. The closer you get to your potential customers in terms of offering, communication channels and messages, the more you will be perceived as being an excellent option to fulfil their needs. Let’s continue with our example of massage therapists wanting to increase their business. ‘Age’ as a marker (among others) could be a great way to segment their market. To attract the 18 to 25 year-olds, focusing on the benefits of a massage therapy after high-intensity exercises could be an option, whereas selling the virtues of relaxation found in a good massage session for the 30 to 55 year-olds would probably be more suitable. Finally, parents could be another interesting marker. The benefits of massage therapy for children are outstanding and what about helping mothers during and after their pregnancy.

In our example, the service remains constant: massage therapy. However, the presentation and highlighting of the benefits change according to the perceived needs of the identified market segment.

If you have any questions, comments or concerns, please feel free to contact me. In the meantime,  I hope I have given you lots of food for thought.

Stéphane Elmaleh-Riel, B.Ed., MBA
Marketing consultant