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How to Segment Markets

Perhaps the most important analytical process of marketing is segmentation. By segmenting the market, one obtains a very clear understanding of customers; and segmentation ultimately provides a basis for clear and precise targeting and positioning.

But segmenting is also very difficult—and, especially without customer data, it is, I would admit, an art form in marketing.

You can become quite confused about segmentation if you read the popular press or most marketing textbooks, or look at countless Internet companies... because the term has been used to signify many things.

Typically, you'll find the term segmentation applied to demographics and lifestyles in consumer markets, and to size, industry and geography in business markets. On the Internet, people use age, gender, etc. for segmentation (or, worse yet, confuse segmentation with terms like one-to-one marketing—as though people are so unique that they have little in common).

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