A new approach to market segmentation

Few, if any, topics in marketing have commanded more attention than market segmentation. Hardly a journal issue appears that does not include some article on the subject. Almost all marketing texts devote at least a chapter to the topic, and whole books have been written on segmentation. Techniques for carrying out segmentation have also increased in variety and sophistication. Multiple regression and discriminant analysis were the standard approaches a decade ago. Now they frequently take a back seat to such procedures as Automatic Interaction Detection, factor analysis, cluster analysis, perceptual and preference mapping and conjoint scaling. With the profusion of techniques has come a profusion of segmentation bases--perceptual-preference segments, needsoriented segments, common-problems segments, benefits-seeking segments, psychographic segments, and so on. One could easily get the impression that the topic has become too complex for mere mortals to comprehend. One of the purposes of this article is to argue that such is not the case. I first discuss the role that segmentation can play in the formulation of marketing strategy for either products or services, consumer or industrial. The second part of the article suggests that the complexity of segmentation methods is more apparent than real. Two basic approaches to segmentation--a priori and post h o c a r e described, and it is shown that all current approaches boil down to one of these types, or possibly a hybrid of the two. A new method is then proposed for examining relationships among alternative bases for segmentation that may be under consideration by the researcher. The third part of the article describes a new approach to segmenta t ioncomponential segmentation. The characteristics of this method are described nontechnically, and the results of an empirical application are reported. 1