Market Segmentation: How to Do It and How to Profit from It, Revised and updated 4th Edition

Chapter 8

Forming market segments out of like-minded decision-makers

Summary

The segmentation process has now reached the point where all the details required for segmenting the market are in place. This, the fifth and final step in the development of segments, as illustrated in Figure 8.1, constructs these segments based on the decisive buying criteria identified in the last chapter.

Figure 8.1 The segmentation process – Step 5

Once the segments have been formed, the picture is completed by consolidating for each segment the profiling attributes and estimates of size put together in Step 3 for the customers they now represent.

With a manageable number of micro-segments, internally resourced segmentation projects can conduct this step manually, and this chapter provides the guidelines you require to form your segments this way. Most internally resourced projects should, therefore, be able to construct their own segments along these lines. The alternative is to use a computer package specifically designed for the purpose, the assistance of which will certainly be required for the quantitative stage of any market research you commission.

This chapter is organized as follows:

• An introduction to ‘market segments’ and an overview of their key components
• A discussion about the size of segments and economic viability
• Balancing market segments with the number of different marketing ...