Your Market Segmentation Process Framework

A market segmentation process framework or context is the first essential step in beginning the process.

The framework starts with critical choices about the purpose of doing a market segmentation. In short, to answer the question of why your organization wants to segment.

Setting Objectives For Your Market Segmentation Process

Working to increase sales among your present customers?

Looking for more high-profit customers?

Converting potential customers into regular customers?

Refining and honing your sales efforts, including advertising, communications, and social networking?

Improving your customer-facing operations?

Filling your new product pipeline with on-target products?

Okay, we hear you saying, we want ALL those things! We did too. And part of the market segmentation process framework is to choose and set priorities on your outcomes. These answers will drive the process.

Can't we go after it all?, you might ask (again).

You can get elements of each, certainly, as they fall out underneath the framework you construct. The framework or context is the largest question you are working to answer.

For example, suppose your market segmentation team decides, after consideration and debate, that the main focus of the effort is to identify the highest volume and the most profitable customers of your organization.

A Customer-Driven Framework

The framework in this case is customer, rather than market-focused.

Your objectives in this case might be:

1) to segment your best customers
2) to understand what drives purchase behavior
3) to determine what competitors your "best" customers are also using and what strengths and weaknesses those customers perceive about your competitors and about your organization
4) to determine what additional features, or new products, would attract them
5) to explore how to better serve your best customers
6) to explore how to better communicate with your best customers

A Market-Driven Framework

Conversely, if your framework is to focus on potential customers (market-focused), you would have different objectives:

1) to identify potential customers in the market
2) to determine which customers are category users already
3) to identify which customers are potential category users
4) to develop segments of potential customers
5) to determine what product features, and potential features, would attract potential customers to you

The critical issue here is to establish a framework, with objectives, as metrics of the degree of success of the process. Because of the length of the process (usually six to twelve months) and because myriad issues and possible directions will emerge inherently as part of the process, it is imperative to have a clear framework.

Once the framework is established, the next step in the process, a thorough evaluation and examination of existing research, proceeds.