Market Segmentation and Segment Selection

Market segmentation is one of the most fundamental concepts in marketing and your choice of which approach to adopt will directly affect the impact of segmentation on your business. Market segmentation, correctly applied, is about understanding the requirements of customers and, therefore, how they decide between one offer and another. This insight is used to form groups of customers who share the same or very similar value criteria. A company is then able to determine which groups of customers it is best suited to serve and which product and service offers will both meet the requirements of its selected segments and outperform any competition. Once you identify the segments, you should select the segments whose needs the organization can best satisfy and from which the organization can generate an appropriate return on its investment.