Rediscovering Market Segmentatio

Rediscovering Market Segmentation

by Daniel Yankelovich and David Meer

Market segmentation: the process in marketing of grouping a market (i.e. customers)

into smaller subgroups. Wikipedia

Introduction

Because there are so many different kinds of people with just about each one of them displaying different buying patterns, Yankelovich introduced the concept of non-demographic market segmentation in 1964. To Yankelovich's disappointment, the concept wasn't applied as intended. Unfortunately, according to the authors, market segmentation has become narrowly focused on the needs of advertising which only creates commercials with characters that viewers can relate to. But, if applied properly, market segmentation would guide companies in tailoring their offerings to the segments most likely to purchase them.

The article, Rediscovering Market Segmentation, explores how applying segmentation to product, pricing and sales strategy can use customers with similar attributes for a financial and competitive advantage.

The Drift into Nebulousness

Prior to World War II, consumers were pretty predictable in their buying habits. During this era, there many incredible innovations in consumer products, disposable diapers, disposable razors, good-tasting toothpaste (instead of bad tasting baking soda), etc.). These cool items basically sold themselves. Marketing segmentation was based on narrow demographic traits such as gender, age and family size. According to Kotler and Keller, this is a sector and not a segment. (p240)

But, the 60's brought many changes; long hair, loud music and unpredictable consumer spending habits. This is when Yankelovich introduced the idea of non-demographic segmentation in his 1964 article, "New Criteria for Market Segmentation". Per Yankelovich's 1964 analysis, "We should discard the old, unquestioned assumption that demography is always the best way of looking at markets." This non-demographic segmentation was a way to focus on the differences among customers that matter the most strategically.

Per Yankelovich and Meer, if companies