Market segmentation is a much more strategic tool than traditional market research. Market research is the process of exploring existing market conditions, whereas the process of market segmentation is senior management?s interpretation of a market as it relates to their own distinct goals and objectives. Market research explores and identifies existing markets; market segmentation creates and invents new markets.
Through the use of advanced analytic and statistical programs, market segmentation provides an in depth analysis of a group of people with common characteristics, ideas, and activities. It provides guidance to positioning your product or service in the marketplace relative to competitors and to customer desires. It is useful in identifying new products and services to offer.
Unlike traditional research, which is used by marketing managers at the functional level, market segmentation can and should be used at the most senior executive levels for strategic planning into which markets the company should go, and what offerings should be made.
Segmentation will also help identify the potential of markets, including share, profit and the potential return on investment.
There are few approaches as helpful when it comes to assisting businesses meet the restructuring and organizational challenges they must face to survive in the tough business environment of today.