Common Mistakes In Market Segmentation
Segmentation studies tend to be large and complicated, so it’s easy for errors and mistakes to be made. Some of the most common mistakes:
- Segmenting a segment . For example, someone might want to segment the market for widgets among 18- to 24-year-olds who live in Vermont and buy brand XYZ. As is evident, the client is asking that a tiny sliver of the market be segmented. True, this tiny sliver can be segmented, but rarely are the resulting segments of any value, because they are just too small. General rule: segment the whole market, including all age groups. The market should be broadly defined for a segmentation analysis to be most effective. In other words, don’t preordain the results by sampling restrictions.
answers and come up with confusing and baffling results.
Nonmutually Exclusive Segments
Virtually all segmentation work, historically, has been based upon the assumption of mutually exclusive market segments. The mutually exclusive model, however, does not always apply to psychographic or lifestyle segmentation (since most of us hold many overlapping and/or conflicting beliefs and attitudes). Therefore, it is wise to develop two distinctly different segmentation solutions: one based upon mutually exclusive segments and one based upon overlapping segments. Both of these segmentation “solutions” should be crosstabulated by the original questionnaire variables to identify which type of solution yields the most meaningful (and actionable) market segments.
Final Thoughts on Marketing Segmentation
The concept of market segmentation is sound. It’s a way to apply greater marketing energy or force to a subset of the market. A great deal of money is wasted on psychographic segmentations that never lead to any marketing actions. If you segment the market by psychographics, there are several essential uses of the segmentation: first, target your brand to the largest segment with relevant brand fit (or even target two closely related segments) by media advertising and message . That is, the advertising message is the way to reach the psychographic segment (rarely can a psychographic segment be defined by demographics or geography). Second, segmentation can provide the guide rails for brand positioning. That is, positioning assumes, or takes place in relation to, a target market segment; you are positioning your brand in relation to a market segment. Third, the segmentation can define opportunities for new products targeted to each psychographic segment. That is, the market segments can be a template for new product development. For example, if you find that 15% of the U.S. population belongs to a “safety first” segment when it comes to buying cars, then you can design and build the safest car in the world to target this segment. So psychographic segmentation’s greatest value lies in positioning, targeting via advertising message, and defining new product opportunities. Go forth and segment.