Performing a market segmentation is part and parcel of every marketing plan. The new best-practice paper on segmentation by Warc advises that it must now cater to a digitally-savvy audience.

As brand managers and marketers, you would know that the foundation of all marketing strategies lies not in coming up with the most creative of ideas or the most cost-effective of budget. It is, of course, good segmentation. After all, how do you write a song if you don’t know what language your listeners speak?

However, segmentation today is no longer just looking at how old, what job and how many babies do they have. From buyer behaviour to loyalty to even hobbies and lifestyles, there are a range of considerations that are not included in academic graphs or theories, and can only be analysed based specifically on the product or service you are trying to market. Moreover, with the uprise of technology, traditional segmentation methods need to be relooked at and real time data and live interaction need to be considered as well.

At the same time, with the ability to customise just about any good or service, companies need to respond to each individual buyer’s own needs and demands.

Looking at the latest segmentation best-practice paper released by Warc, more creative methods and flexible segments need to be considered. Whichever way your company might decide to segment your potential market, be it by behaviours and attitudes, locations, benefits sought or lifestyles, it is crucial that the segments are realistic and effective.

Warc recommends the following checklist:

  • Homogeneity: Can the members of a segment be shown to act in the same way?
  • Size and profitability: Is the prioritized segment big and profitable enough?
  • Distinctiveness: Are the segments sufficiently different?
  • Universality: Will this segmentation work across many/all of the organisation’s territories?
  • Stability: Will the clusters be reasonably stable over time?
  • Usability: Are the clusters usable in terms of our current marketing processes (especially in media and creative)?
  • Accessibility: Is it possible to reach this segment?
  • Attractiveness/relevance: Would customers want to identify with this segment?

Most importantly though, the segmentation method must make sense and convince the higher-ups that it is understandable to leave out consumers that do not fall into the targeted segments.

The paper highlighted the importance of ensuring that the method of segmentation used by each brand is market based and matches the brand’s existing consumers.

The rest of the paper can be viewed here.

 

 

 

Belle Kwan
BY Belle Kwan ON 8 August 2011
Assistant editor, Marketing magazine & marketingmag.com.au
A marketer's dream who believes everything she sees on TV.
Advertising is not evil, it is an artform and a science.