Market Segmentation Best Practices: 4 Simple Rules
Market segmentation analysis isn’t as challenging as it seems to be. The market segmentation process just takes time and research. It is important to prepare and do your research up front to determine the potential market segments and then align it with your marketing efforts.
Here are four simple rules for segmentation:
Rule 1: Avoid broad classifications of different segments, instead of narrow down the process to gain a better understanding of your competitors
Rule 2: Organize your business by market segments instead of establishing market-focused groups and then organizing them into a market-focused business model
Rule 3: Manage your segments worldwide
Rule 4: Complete your analysis and research
About the Client
The client- a leading player in the US automotive industry. The automotive industry player is one of the ten biggest car companies in the world.
Like other US automotive industry players, the client in this study faced major challenges due to- a wave of global consolidation and acquisitions in the automotive market, a sharp decline in the buyer’s market that was keeping prices and viability down, inefficient distribution that hindered innovation, and wide variations in profitability that slimmed down the chances of growth and profitability. The automotive industry client wanted a clear direction to move forward with an idea of which market will be the best target. In this context, the automotive industry client wanted to establish three major goals through a detailed market segmentation analysis:
- Identify market sub-segments that have the greatest profit potential
- Identify segments interested in purchasing more value-added services
- Develop products, services, and marketing messages that address the specific needs of the segments
By systematically engaging in a detailed market segmentation analysis, the client was able to improve profitability and competitiveness in several fundamental ways. The market segmentation targeting and positioning study helped re-evaluate the client’s strategies designed to determine- the profitability of different segments, whether different product features could be used to differentiate themselves in different market segments. Moreover, a detailed market segmentation analysis and persona profiling enabled the automotive industry client to carve out a niche for themselves in the new high potential market segment.
The insights gleaned from Infiniti’s market segmentation targeting and positioning study included:
- Customer groups
- Market opportunities
- Segmentation implications and recommendations
Our market segmentation expertise and global network enable automotive industry clients to drive change and flourish in a fast-changing and unpredictable industry.
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