Segmentation can provide the roadmap for short- and long-term success for a brand
The appeal of segmentation has a lot to do with efficiency. Marketers can’t be all things to all people, so they focus attention, strategy and resources on those things they can best deliver. Marketing spending can be targeted to the most attractive business opportunities, where the impact can be greatest. Segmentation gives an organization a way to concentrate its marketing activities, based on selected customers and particular brand positioning elements.
Segmentation can be especially useful for companies that have large potential customer bases and complex portfolios of brands. Segmentation helps sort out questions of who the ideal customer is and what will be offered when there is substantial internal overlap, cannibalization and competitive strategy.
Rapid changes in the marketing environment create direct challenges to long-held views on core ideas like segmentation. Digital technology fuels major changes in the marketing mix and in the nature of information to understand and track customers. A continuing stream of new ideas competes for the attention of marketers, advocates new strategies and practices and promises improved performance in market.
Segmentation has long been central to many marketers’ strategies, but does it still have the same relevance as it once did? What benefits accrue for marketing organizations that adopt segmentation? Is there an alternative?