Market Segmentation: a Practitioner Guide to Segmentation
By Dr. Tony Hernandez, Chuck Chakrapani and Tony Lea
The consumer landscape has become increasingly complex over the last fifty years. Today's consumers can be characterized by a mix of diverse needs, wants and expectations - simply, the marketplace for most goods and services can be divided in a multitude of ways into numerous segments (homogeneous groupings of consumers). The challenge for retail and service businesses lies in dividing (or segmenting) the consumer base into groups that are meaningful in terms of behaviours that relate to their products and services, can be readily identified and cost effectively reached. This report focuses on this challenge by providing an overview of market segmentation approaches from a practitioner perspective. The report acts as a primer, with a basic five step market segmentation process identified and detailed. The steps take the reader from initial variable selection, through the use of analytical techniques, the potential pitfalls of segmentation to the real-world application of market segments. This publication is part of the CSCA's ongoing technical report series, see for example, 'What's in a Trade Area' and 'Modeling Commercial Property Values in the GTA'.