Steps in the Segmentation Process

Five major steps are involved in dividing markets into meaningful segments, although these steps and their description may vary from one situation to another. 

a. Define and analyze the market - determine market parameters (based on characteristics that may include or exclude customers from a group) within organization’s mission and business definition, as well as its strategic intent. 

b. Identify and describe potential segments - decide on the most useful dimensions or variables for selecting members of potential market segments; then aggregate customers into homogeneous groups, develop a profile of the characteristics of each group, etc. 

c. Select the segment(s) to be served - select segments by evaluating against predetermined criteria, then rank according to the organization’s ability to serve the market profitably while providing customer satisfaction. 

d. Determine the product positioning strategy - determine the best “fit” between a product and a market according to features most desired by customers; consider competitors’ positioning strategies, organizational goals, and the market situation. 

e. Design and implement the marketing program - develop a tactical plan (marketing mix) and determine objectives for the marketing program; all elements of the marketing mix must be consistent with the selected positioning strategy.


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