Segmentation Strategies Using our limited resources wisely Mass market approach Large segment approach Adjacent segment approach Multisegment approach Small segment approach Niche approach Mass customization approach

Segmentation Strategies Mass Market Approach: a generic value proposition built around the core customer need and the business’s generic positioning strategy Use when: differences in customer needs are small

Segmentation Strategies “Large Segment” Approach: address one set of core customer needs Use when: resources are limited advantage: benefits of segmentation while providing a relatively large market demand

Segmentation Strategies “Adjacent Segment” Approach: move into the next most attractive segment Use when: growth is desired but resources are limited advantage: use profits from primary segment to move into closely related segment

Segmentation Strategies “Multisegment” Approach: multiple market- based strategy where several segments are targeted, each with its own marketing mix Use when: growth is desired but resources are limited advantage: tailor our efforts toward most attractive segments improve efficiencies portfolio effect

Segmentation Strategies “Small Segment” Approach: focus on the smallest segment Use when: resources are limited, specialized capabilities small segments are ignored by competitors pursuing mass market or large segment strategies

Segmentation Strategies “Niche” Approach: focus on a portion of the smallest segment Use when: some needs cannot be fully addressed within a single segment

Segmentation Strategies “Mass Customization” Approach: complete opposite of mass market strategy; each unique group of customer needs is a niche Use when: database marketing allows customization within each segment combines the advantages of niche segment strategy with the breadth of opportunity available in a multisegment strategy customers create their own segments Disadvantages: increased price of customized products delay in receipt of custom-made products need for customers to invest time in specifying their preferences before the product can be produced

So… Each segmentation strategy has its own merits and limitations Segmentation is the first step in Customer Relationship Management Demographics alone seldom provide much guidance for product development or message strategies – we need to group people on the basis of similar needs