A Segmentation You Can Act on

The article discusses about problems of market segmentation. Companies often address this problem by developing segmentation schemes breaking down markets into sets of customers or potential customers who share attributes that might be based on demography or on values or needs. Unfortunately, easy cases permitting marketers to establish meaningful differences among groups of customers and then to identify them-a phenomenon called "actionable segmentation" are rare. More often, despite decades of research and many refinements in the basic model, the segmentation process creates very real difficulties for marketers. A leading insurance company based in the United States spent a lot of time, trouble, and money dividing its world into segments, only to run into exactly this problem. In the end, the company abandoned segmentation entirely. The basic difficulty is that value-based segments generally don't fit neatly into demographic ones. Many companies therefore start with the simpler task of identifying differences based on demography or on the different attributes of different companies. In general, selecting targets is the first task of any segmentation strategy. Before worrying about how to identify and reach individual customers in any given segment, it is worth attempting to determine whether the collective traits of a market segment might themselves suggest profitable strategies.