Bases for segmentation
There are many ways that can be used to segment markets. I tend to focus on buyer/consumer segmentation, but other approaches which are used (often in parallel with consumer segmentation) are:
- Buying Category – for example in the Restaurant and Hospitality Industry that Springhill Country Guest house operates in marketers could base segmention on categories such as:
Hotels – large/small; chain or franchise; State/City/country
Pubs – large/small; State/City/country
- Distribution Channel – For example Chains; Pharmacy; Newsagents; vending machines; retail/wholesale
- Demand and Growth Related Attractiveness Is the segment sufficient in size? Will it grow further?
- Size Segments should be generally large enough to warrant the investment in targeting them with a new offer. They should remain attractive over a reasonable period of time to enable payback of investments.
- Competition Related Attractiveness One of the goals of market segmentation is to identify a profitable or strategic opportunities for the organisation. Segments that have a high degree of competitive activity may not be attractive.
- Resource Related Attractiveness Organisations need to consider how they can utilise their limited resources to best target and service each segment.
- Accessibility An organisation must be able to reach or access the segment, either with a design product offering or specific communications.