Mcdonald-Market Segmentation

Topics: Marketing, Strategic management, Marketing research Pages: 25 (7496 words) Published: July 17, 2010
MARKET SEGMENTATION: ORGANISATIONAL ARCHETYPES AND RESEARCH AGENDAS* Mark Jenkins & Professor Malcolm McDonald Cranfield School of Management

Address for correspondence: Mark Jenkins, Cranfield School of Management, Cranfield University, Bedford, MK43 0AL, UK. Tel: +44 (0) 234 751122; Fax: +44 (0) 234 750070 EMail:

Paper submitted to the European Journal of Marketing, February 1995. The authors acknowledge the invaluable comments of Professor Martin Christopher and the anonymous referees on earlier drafts of this paper.




The study of how organisations segment their markets has traditionally taken a prescriptive and analytical approach. More recently, a number of academics and practitioners have voiced concerns over the evident gap between how such concepts are viewed in theory and how they are applied in practice. These issues have already been raised in academic papers, but almost entirely at an abstract level. This paper introduces a more concrete aspect to the debate by proposing a series of organisational archetypes which illustrate how organisations may segment their markets in practice. These archetypes are developed from a series of minicase studies which provide a basis for understanding how organisations may interface with the market at both an explicit and implicit level. The implications for both academic research and organisational practice are reviewed and discussed

The activity of marketing and the concept of the market are inextricably linked. If an organisation is to enjoy any level of marketing success, this is through an ability to match its own capabilities to the requirements of the market place. Central to this matching process is the segmentation of the market. Wendell Smith [1] is widely cited as providing the basis for the concept of market segmentation as it is applied today. An overview of the literature on market segmentation underlines the view that markets, and their segments, are clusters of potential customers (e.g. Kotler, [2]; Tynan & Drayton, [3]). Wind [4] summarises market segmentation as a proactive process (managers purposefully identify segments) involving the application of analytic techniques to identify these segments:


"Realising the potential benefits of market segmentation requires both managerial acceptance of the concept and an empirical segmentation study before segmentation can begin." The basic premise of market segmentation is that a heterogeneous group of customers can be grouped into homogenous clusters or segments, each requiring differing applications of the marketing mix to service their needs. The focus of research and discussion has therefore been concerned with the analytical approaches by which homogenous clusters can be established from a heterogeneous sample: "The largest problem is how to subdivide the market." Moriarty & Reibstein [5] This emphasis on the analytic basis for segmentation has been widely applied to both consumer [6, 7, 8, 9] and industrial markets [10, 11, 12, 13, 14,15].

Theory versus Practice
However, this approach assumes segments to be objective, identifiable entities which are 'out there' available to all managers and organisations. In addition, there is the assumption that segmentation is a process which managers undertake explicitly to maximise their market effectiveness. These assumptions can be challenged on two levels. Firstly, such approaches to segmentation take no explicit account of organisational capabilities or structure, which is in contrast to studies concerning the business or market definition. At a strategic level, market definition and segmentation become more closely linked to the capabilities and nature of the organisation. Abell [16] uses three dimensions for defining and segmenting the markets in which an organisation operates: customer group; customer function; and...
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