Construct Quality Target Segments for Market Research

Adapt a Critical Orientation When Evaluating Your Own Market Segments

Take a Critical Look at Target Market Segmentation Assumptions
Adopt a Critical Approach to Evaluating Your Market Segements. Getty Images | Alex Whitehead | Moment Open

Market segments are pivotal to the implementation of successful marketing strategy.  The process of identifying and constructing usable segments and potential target markets is reasonably straightforward. The integrated approach that considers the relationships between segmentation, target market, and position is commonly referred to as the STP model.  

It is, however, important to periodically take a critical eye to the approach, processes, and outcomes used to construct your own target market segments.

 Indeed, some basic guidelines for segmentation have been established by market researchers and marketers over the past several decades.  Below are some fundamentals to consider when evaluating how you approach segmentation.

Market Segmentation Evaluation Guidelines

Effective target market segments are associated with some particular attributes, each of which is described below.  The key attributes to look for when constructing or evaluating target market segments are:

  1. Homogeneity
  2. Heterogeneity
  3. Measurability
  4. Substantialness 
  5. Accessibility
  6. Actionable and / or practicality
  7. Responsiveness

Homogeneous - The primary purpose of target market segmentation is to establish groups of consumers who are similar with regard to their individual characteristics or product and service needs.  For this reason, all of the consumers assigned to a segment are allocated according to relevant similarities.

Heterogeneous - Each of the segments in a target market should demonstrate some relatively unique attribute when compared to other constructed segments in the target market.

 Homogeneity is the sweet spot in target market segmentation, while heterogeneity is the constellation of distinct groups that can be found in the market universe.

Measurable - In order to have the capacity to determine market share and other measures of growth or change, it is essential to have some type of data that can be used to measure the size of the different segments in the target market.

 One of the most basic measures that a marketer or market researcher will employ is the overall attractiveness to consumers of each segment to within the target market.

Substantialness - Market segments will, of course, be different sizes but each segment must be a standalone of sufficient size to warrant the allocation of resources necessary to measure marketing effectiveness and track changes related to the segment.  Clients usually weigh in on how much return on investment is sufficient for marketing to a particular segment.  The return on investment (ROI) may be anticipated to differ substantially for the various market segments of the target market. Regardless, minimum requirements for ROI are usually established before segmentation commences.

Accessible - Clients will only be interested in learning about target market segments that are accessible.  That means that each market segment must be efficiently reachable and lend itself to effective modes of communication.  Accessibility also applies to considerations about the eventual distribution of the products and / or services that are intended to attract the segments.

Actionable and / or Practical - The primary action that is taken in response to constructed target market segments is implementation of a distinct and particular marketing mix for each segment.

This is what clients are looking for when they engage market researchers in the process of establishing target market segments for their firms.  For marketing to particular segments be practical, the proposed marketing and advertising activities must fall within the range of available  resources and the core capabilities of the client's firm.  This means that specialized or niche segments, while intellectually attractive to a client, may not be practical from the perspective of marketing spend. 

Responsive - Establishing a target market segmentation structure can require a considerable and dedicated amount of resources.  For this reason, each of the segments should demonstrate a robust response to the distinct marketing mix that is designed for them.  This response should be markedly less than any generic marketing mix offered, say, by competitors.

 The main objective of the integrated processes of segmentation, marketing, and positioning (STP) is to establish a unique marketing mix for a particular target market.  Should a market segment not demonstrate responsiveness to a distinct marketing mix offering, it is very likely that the segment can be consolidated into another relatively similar market segment.

Sources: 

Debevec, K. (n.d.). The STP Marketing Process. The Isenberg School of Management, University of Massachusetts-Amherst.

Kotler, P. and Armstrong, G. M. (2008).Principles of Marketing.  Pearson / Prentice Hall.