The major concern for companies all over the world is how can they create new business strategies, trends and try to implement them into their business.

Segmentation is the process of dividing a market into different customer groups with similar characteristics, behaviour and equivalent needs. The most popular criteria for this division are: socio-demographic (age, social class, gender), geographic (regions or countries), behavioural (buying habits) and psychographic (personality and lifestyle).

During the sixties, market segmentation became popular as a result of an article by the leading marketing researcher Daniel Yankelovich; where he emphasized the benefits of advertising development.

Formulating strategies for product development

Companies segment their customers in order to serve them in the most appropriate way. Bear in mind that not everyone has the same needs so it is not possible to serve all of your customers the same way. Segmentation enhances the ability to deliver value by identifying what customers are willing to pay given that price elasticity will vary between segments. Appropriate segmentation is useful for formulating strategies for product development, promotions, communications, price and distribution where you are targeting groups that you want to attract the most for your business objectives. Even companies that adopt an undifferentiated market strategy, segmentation may be useful in the process of identifying needs and developing new products and services.

In the process of marketing, segmentation occupies a key position with the assessment of the opportunities and threats. A desired target market is defined and formulated by positioning and by marketing mix.

In today’s marketing many things have changed but the need to subdivide the market and increase the ability to deliver value remains a key tool.

Has your company done any subdivision of its market based on the results of an investigation based on tradition or common practices of the industry (sales, geography)? It might be worth a try.