Rediscovering Market Segmentation

Introduction: Through this paper, the authors Daniel Yankelovich and David Meer direct the attention to the true purpose of Market Segmentation – “Discovering Customers whose behaviors can be changed or whose needs are not being met”. Through analysis the authors describe how the Segmentation, if properly applied, would guide companies in tailoring their products & services to the groups most likely to purchase them. Good segmentations identify the groups most worth pursuing – The Underserved, the dissatisfied and those likely to make first time purchase. Good Segmentations are “Dynamic” in the sense that they recognize that the 1st-time purchaser may become underserved or dissatisfied if his/her need changes.

Historical Perspective – Pervasiveness of Psychographic Segmentations: By the 1970s, product innovation slowed down and products became less distinct. Creative departments in companies shifted their focus from products to customers. Instead of developing products that met intense unmet needs, companies made product refinements/enhancements and then tried to find customers who were already susceptible to their allure. Since the attraction of products was based not on functionality but on things like status, Psychographic segmentations based on psychological variables such as attitudes, values, fears became pervasive. The drift away from “Functional” Segmentations and towards “Emotional” Segmentations was accelerated by advent and wide acceptance of programs like Values & Life Styles (VALS) program which classified individuals according to 9 enduring psychological types.

Pitfalls of Psychographic Segmentations: Psychographic Segmentations do little to enlighten companies about important questions – which markets to enter or what kind of offers to make, how products should be taken to market and how they should be priced. These segmentations can be used for brand reinforcement, but the attitudes that such ads invoke are not the drivers of commercial