Different Segmentation Approaches?


Do firms segment a market in the same way?

The short answer is no. It is likely, that long-established competing firms will have a number of similar target markets. However, their overall identification of different market segments is quite likely to vary to some extent.

Even direct competitors that use a quite similar overall market definition will tend to adopt different market segmentation bases when segmenting the consumers in the marketplace.

There are several reasons why this occurs, as listed in the following table:

Reasons for Using Different Segmentation Variables

How to Use Market Segmentation for Strategic Advantage

Competitive advantage By looking at (and analyzing) a market in a different/unique manner, firms have the goal of better meeting the needs if the market, thereby gaining an advantage over their competitors
Unmet needs Looking at the market in different ways is more likely to identify market segments that are not being fully catered for
Market understanding Utilizing different segmentation variables will enable management to gain a stronger and more detailed understanding of consumers and their behaviors in the market
Strategic goals Some firms have clear growth, or market expansion goals, which require them to constantly find new opportunities or to be more innovative
Access to data Larger firms usually conduct more market research studies and have access to more data, which allows them the opportunity to consider a greater choice of segmentation variables
Market fragmentation Some firms, as a competitive approach, like to fragment the market by deliberately targeting many small segments (thereby reducing the competitive threat in each target market)