Segmentation

Needs-Based Segmentation: Customer should be segmented on the basis of their needs

Step 1: Identifying the full combination of needs that this product satisfies!

• Positive and negative

Step 2: Identifying different groups of people (segments) who may possess this set of needs!

Step 3: Describing Segments

• Measure the segment (how big is it?) accurately

• Reach the segments (tailor our marketing mix (4Ps) / get the message and product to the segments)

• Select which segment(s) we will target (if necessary)

Strategies for identifying segments in a whole market:

1. Differences within Product Category

   1. First, identify central product category needs

   2. Then, consider other relevant needs they need simultaneously

2. Combine Needs

   1. Look for segments of consumers who wish to achieve goals of different product categories by using a single product

   2. Combine features from different categories

3. Solve Problems

   1. Identify (combinations of) goals for which no good solution currently exists

   2. Often based on creative or technological solutions to experienced problems

4. Observe

   1. Spend time with people as they naturally use the product or service

   2. Ask them questions while they are doings things you want to be observing

      1. Ethnography (Participant Observation)

         1. Studying consumers as they are interacting with products/services in their natural habitat

         2. Involves extended immersion in consumers’ environments

         3. Useful to discover insights that typically do not emerge from traditional research questionnaires and focus groups

         4. Netnography involves online observation (e.g., message boards, blogs etc.)