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By Michelle Whitmore, Marketing Manger, Quaero, LLC - www.quaero.com

In today�s demanding society marketers not only have to find the right message for each customer, but find the right customer in the right channel at the right time, making this one tall order. Through market segmentation, however, marketers have a means to achieve this daunting task.

Market segmentation began to take off in the 80s as a means of expanding sales and obtaining competitive advantages. By the 90s segmentation lead to reaching potential buyers with the most customized offerings possible for mass customization. More so today, segmentation means avoiding the wrong message conveyed to a particular person at the wrong time, thereby paving the way to developing profitable relationships.

As segmentation continues to evolve, many companies still struggle to come up with the right recipe, because they fail to understand the complexities of their customer base. Basic descriptors such as:

• Demographics - age, sex, income, education, race, martial status, size of household, geographic location, and profession.
• Psychographics - personality and emotionally based behavior linked to purchase choices; for example, whether customers are impulsive buyers, risk-takers, or risk-avoiders.
• Lifestyle - recreational pursuits, hobbies, entertainment, vacations, and additional non-work time pursuits.
• Belief and value systems - religion, political, nationalistic, and cultural beliefs and values.
• Life stage - benchmarking of people's lives at different ages (e.g., pre-teens, teenagers, recent college graduate, retiree).

In developing a new product, or embarking on a new business venture, segmentation can help to predict return on investment. Do I have enough of the right customers to support this product or idea?

For example: a bank desired to leverage the cost efficiencies of Website interaction and statement processing. They decided to influence the use of this channel by accessing a fee for snail mail statement delivery; thereby, saving the company thousands of dollars on printing and postage. They failed to recognize that the majority of their customers were seniors who preferred more traditional methods of communication and didn�t even own a computer. By segmenting their market, the company could have targeted technology adapters - those whose previous behaviors predicted their channel preference - by offering them a choice on how they would like to receive their statements. Instead, while having received a temporary gain in additional revenue, they lost over 35% of their most profitable customers.

Bottom line...without a clear understanding of what that piece of chocolate chiffon pie is going do to your waist band you may want to consider holding the dessert because you could be asking for nothing but heartburn. Market segmentation isn�t necessarily going to be your answer to all things great and evil, but it can certainly help you make healthier, more intelligent decisions.

Michelle Whitmore can be reached at whitmorem@quaero.com to answer specific questions regarding this article. Opinions expressed in the article are only those of the author.