A crucial decision in any segmentation project is correctly identifying in the specified market who it is you should be segmenting.
This is not always as straightforward as it first appears. A market map will help you make the right decision. The example below is constructed to be read from the right across to the left.
Note: The total market size is 100 units.
Market mapping, as defined and developed by Malcolm McDonald and Ian Dunbar, is used in market segmentation to help companies identify the target group(s) for their segmentation project and forms the second step in the segmentation process. It also has a number of other important applications, such as tracking changes in the channels to market, presenting your own company's performance on these routes to market and illustrating where your sales and marketing resources are allocated, which can then be compared with how your key competitors allocate their resources.
A market map defines the distribution and value added chain between final users and suppliers, which takes into account the various buying mechanisms found in a market, including the part played by ‘influencers’.
See examples for market maps produced during in-company segmentation workshops.
The Market Segmentation Company also conducts projects based entirely around market mapping. If you would like to discuss marketing mapping for your company, either register your interest using this website or contact us by any of the methods listed.
Full details of how to draw up a market map for a segmentation project are to be found in Chapter 5 of Market Segmentation: How to do it and how to profit from it (2012 edition published by John Wiley & Sons, ISBN 978-1-1184-3267-9). Chapter 11 of the same book takes a more detailed look at market mapping, including how to capture its additional uses.
The simple answer is to segment those individuals who are the decision-makers, that is those individuals who are really determining which of the competing products and services should be bought.
However, in markets where your products and/or services are accessed by the decision-makers through independently run distribution channels or intermediaries, a successful sales and marketing strategy will require you to:
Each of these two groups would have to be regarded as separate segmentation projects. If you are fortunate enough to own a brand that intermediaries see as one which they have to sell because demand in the market place is so strong, then you may decide that it is not essential to segment the intermediaries.