Target segment strategy

Dibb, Sally and Simkin, Lyndon (2010). Target segment strategy. In: Baker, Michael J. and Saren, Michael eds. Marketing Theory: a Student Text. London: Sage, pp. 237–260.

URL: http://www.uk.sagepub.com/books/Book234411

Abstract

Market segmentation principles are well established in marketing theory and a recognized component of marketing strategy (Weinstein, 2004). As customer needs become increasingly diverse, market segmentation offers organizations the means to handle this complexity. This is achieved by grouping into segments customers who are homogenous in terms of their needs and buying behaviour (McDonald and Dunbar, 2004). For organizations the benefits include more efficient resource allocation, marketing programmes which are a better fit with customer needs, and improved competitiveness (Beane and Ennis, 1987; Wind, 1978). Despite these attractions, organizations which implement a segmentation approach have many decisions to make about the methods they will use and how they will interpret and implement the outcomes (Dibb and Simkin, 2008).

This chapter provides an overview of the market segmentation process and explores what is involved in target segment selection. The chapter begins by outlining the reasons for carrying out segmentation and the associated benefits. Various methods for developing segments are then described, illustrated with topical examples from the mobile phone and energy markets. The criteria for judging the quality of the resulting segments are highlighted, followed by a discussion of targeting decisions and segment choice approaches. The chapter concludes with a series of warnings for segmentation users, designed to minimize the most commonly encountered impediments to the process and to the implementatioin of its outputs.

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