Step 3: Setup Market Segmentation

Market Segmentation Analysis

After you have analyzed your market position, the next step is to research new marketing segments. These segmentation studies are often supported by marketing research and analysis.

First download and print this section of the Market Planning Model as a guide.

Page Topics:

market segmentation

Types of Market Segmentation

An effective marketing plan will likely require a segmentation of your current markets. Each market segmentation may have its own "product-price-place-promotion" to maximize sales.

Segmentation comes in many forms. The most common include:

  1. Physical Description Segmentation:
    Industry Markets:
    SIC code, size, usage rate,location, etc
    Consumer Markets:
    age, sex, income, family life cycle, etc.

  2. General Behavioral Segmentation:
    Industry buying situation

  3. Product-Related Segmentation:
    product usage
    product influence

  4. Customer-Needs Segmentation:
    benefits sought
    choice criteria

Most small businesses use physical descriptors for segmentation. Large corporations use a combination of segmentation strategies depending on brand and product.

The objective of segmentation is to develop a market within a market to maximize sales.

Review marketing model:
Section Kk

top of page

market segmentation

What Type Segmentation: Case Study

The objective of segmentation is to develop a market within a market to maximize sales.

For example, we completed a segmentation strategy for a carpet-cleaning franchise. There were two distinct segments that we identified:

  1. Residential Household
  2. Hospitality Industry

    we further broke these segmentations down using physical descriptors and customer-needs segmentation.

What we have found was distinct marketing components that helped our client to target and grow their business.

  • Consumer Market
    We targeted high-income households within a geographic area. Price was the segmentation strategy. Even though the target could afford multiple carpet cleanings,the business wanted to convey to the target that they were getting great value at a minimum price.

    We used selective coupons and seasonal incentives in print media and direct mail campaigns.

  • Hospitality Industry
    Service was the segmentation strategy for hotels and restaurants. They needed carpet cleaning that can be performed in the off-hours with the least amount of interruption.

    Our client assigned a dedicated service professional to each respective account. That person was on the job almost daily building the reliability of their dedicated team.

    From this segmentation came a new product opportunity: concrete washing and cleaning.

    Our client was able to expand their service offering to the hospitality industry using customer-needs segmentation for reliable and dedicated service.

Segmentation marketing allows you to develop a product service that addressed different needs. Segmenting your market can open business expansion opportunities.

Review marketing model:
Section Kk

top of page

market segmentation

Market Research

Segmentation strategies are often supported by marketing research and positioning analysis. This is very common with brand marketers such as Kelloggs, General Mills, and other brand-oriented companies.

They use segmentation research to determine whether a market exists. Often, new product concepts may be discovered and tested.

This component is beyond our brief discussion, but included in the download for review. We have within our network marketing research experts who can address any marketing research project.

Review marketing model:
Section Ll

top of page

empty column

Helpful Tools

Some helpful forms business owners:

exit planning module
selling your business summary sheet
valuation calculators