The concept of Market Segmentation was first formulated by Wendell Smith, who suggested that marketers would maximize market performance by “viewing a heterogeneous market as a number of smaller homogeneous markets…attributable to desire of customers for more precise satisfaction of their…wants.”
Panalytics has comprehensive expertise doing market segmentations. Like everything we do, we are transparent in our approach instead of basing it on a mysterious black-box solution.
Our process begins by working with you to make a number of critical decisions, such as identifying your core objectives, any marketing must-have differentiating elements, etc. Once the set of variables is defined, we use a number of well-known mathematical processes (which will be detailed in the methodology of the research) to group respondents into like-minded clusters that are distinctive from each other.
We normally produce two or three distinct segmentation solutions. Together with you we will review these solutions to determine which solution will be most actionable for your product planning and marketing strategic efforts. Typically, we look for four to six distinct clusters in the final analysis.
As first stated by Frank, Massey and Wind, we recommend selecting a solution with clusters that are:
Identifiable – distinctly different on easily measurable variables
Substantial – large enough to matter
Accessible – reachable through marketing, advertising, and distribution
Responsive – respond to efforts aimed at them
Actionable – the segment profile will be able to guide marketing decisions
When created and used effectively, the key benefits of market segmentation are understanding:
The unique needs of each segment – this allows for more effective product planning and clear positioning
What can persuade each segment – this allows for a more effective advertising creative and messaging
The demographics, lifestyles, lifestages and media usage of each cluster – this allows for a more effective product strategy and marketing reach