Market Segmentation Process – Diagram, Stages, Steps & Examples

There are eight steps in a typical market segmentation which as follows,

Step 1: Define a Problem

Market segmentation may facilitate in answering different queries with respect to the market segments response to the firm’s marketing strategies like price or product changes, new product offerings, advertising themes etc. This activity further helps in choosing the target market segments for the firms offerings.

Step 2: Choose the Segmentation Basis

The segmentation studies are conducted by the marketing practitioners with the help of any two alternatives i.e., prior methods and clustering method for selecting the segmentation basis.

The segmentation bases which are followed by marketers is being classified into two major groupings i.e.,

1. General consumer characteristics and
2. Situation specific consumer characteristics.

Step 3: Select a set of Descriptors

Such descriptors of a segment would consists of any variable like age, income, gender etc.

For instance, the extent or quantity of a product purchased basically depends upon various variables like age, location, gender, income, culture, social class and so on.

Step 4: Choose a Sample of Consumers for Collecting Data

The basic idea of this step is to cany out the research and identify the segments on the low-cost

Instead of collecting the data from the complete population, it is collected merely from a sample of population, and then it is ascertained as to whether the segments exist within the sample or

Steps 5: Use Primary and Secondary Data Collection Method

When the marketers collect the data from the sample of consumers then they can make use of both primary data collection method and secondary data collection method.

Step 6: Establish Segments on the Basis of Selected Consumer Descriptors

The marketer should form the segments by defining and by drawing a line between the different segments. This helps in ascertaining as to which segment each sample consumer may belong.

Step 7: Create Profiles of Segments

As soon as all the respondents are being categorized into various segments, the profiles of these segments are to be organized on the basis of their critical differentiating features.

Step 8: Convert the Results into Marketing Strategy

This is the most difficult task of the segmentation project. During this stage, the marketer chooses target market groups, and formulates suitable marketing mixes for the selected segments on the basis of their findings related to segments expected sizes and profiles.

Hence, the segmentation study can be successful if the marketer has the capability to understand and use them as guidelines for the design, implementation and analysis of suitable marketing strategy.