Segmentation Video Series: Episode 06
Segmentation: Solution Criteria

 
Segmentation: Episode 06 Transcript

Hello, I’m Beth Horn, head of the Advanced Analytics Group here at Decision Analyst, and I’m here to discuss how to choose the best segmentation solution.

Some general criteria for useful segments include: segments should share more commonalities with each group than they do between groups, segments should also be large enough for organizations to mount cost-effective campaigns, and segments should be reachable through most media avenues.

  • Market Segmentation Criteria
    I also suggest that segmentation solutions should consider linking those segments to important market outcomes. It is vital to understand which key metrics are important to stakeholders and craft a plan to include those metrics. Such results can help a company determine which segments to target first (groups who are likely to purchase the product for instance), and how to communicate with them.
 

So, when deciding upon a final solution, companies often wonder how many segments should I have, 5, 6, 10, 15, 20? There’s not a magical number, I’m sorry to say. Companies that advertise using mass media, for example, will lean toward fewer segments. Companies that use direct mail or email marketing may use many, many, many segments, because it is relatively inexpensive and easy to market to all of them. A service-oriented industries, such as hospitality and foodservice, tend toward many segments as well, because not only do they have to account for the consumer, but they must account for the day part, the usage occasion.

  • Successful Segmentation
    So, although there can be a great deal of sophistication in the analysis stage, segmentation is not a purely scientific pursuit. Sadly, there are no magic buttons to press to generate the best segmentation solution. So, given that the data have been modeled the most appropriate way and the basics are addressed, category experience and expert judgment are the final guides to selecting the best segmentation solution.
 

So, thanks for watching and please be sure to check out our next video: “Uncovering Motivations.”

Contact Decision Analyst

If you would like more information on Market Segmentation, or if you have any questions, please contact Elizabeth Horn, Ph.D. by emailing ehorn@decisionanalyst.com or calling 1-817-640-6166.