Market Segmentation

We learned in business school that segmentation is the process of dividing a market into distinct subsets that behave in different ways or have dissimilar needs. Because the customers in each segment are fairly homogeneous in their needs and attitudes, they will respond in the same way to a given marketing, sales, and distribution strategy.

We wish it were so simple. In fact, each dimension for segmenting the market presents only a slice of the company’s reality. To get the 360-degree view, it is critical that segmentation include information for the external market and also for the company’s internal operations and distribution partners. Otherwise, it is like a car with only one wheel – it will not go very far.

This is why all departments of the company should be involved in segmentation. It is the best way to overcome the pitfall of limiting the segmentation to a single view of the market. Defining and choosing segments is an excellent platform of communication within the company. This should allow everyone to align their objectives and to gain a complete understanding of their reality.