Steps in Segmentation Process

Description

1 Needs-Based Segmentation

Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem.

2 Segment Identification

For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable.

3 Assess Segment Attractiveness

Using predetermined segment attractiveness criteria, determine the overall attractiveness of each segment.

4 Evaluate Segment Profitability

Determine segment profitability (net marketing contribution).

5 Segment Positioning

For each segment, create a “value proposition” and product-price positioning strategy based on that

segment’s unique customer needs and characteristics.

6 Segment “Acid Test”

Test the attractiveness of each segment’s positioning strategy.

7 Marketing-Mix Strategy

Expand segment positioning strategy to include all aspects of the marketing mix: product, price,

promotion, place, and people.