considerations for a project's parameters
Either or both of
the following refinements may be applicable to your project:
In some instances
it may be appropriate for a company to limit the scope of its segmentation
project to a more specific range of products or services, namely those
it is capable of producing. This does not mean that the company can now
ignore the reality of the market place in which it is competing, it just
enables the output of the project to be more meaningful to the company
(though this may only be meaningful in the short term if the trends in the market are towards an increasing use of the other products and services).
An example may help
to explain this:
Assume you are
a company that produces buttons which you then sell to clothes manufacturers.
Buttons, however, are only one option to the clothes manufacturer as
they could consider studs, zips or velcro as alternatives.
need in this instance is principally about garment fastenings and this
should define the scope of the segmentation project. However, the reality
for the button manufacturer, in the short term, may be that it is not
equipped to make anything else but buttons. It would seem appropriate,
therefore, that this particular companys segmentation project
should initially restrict itself to the button part of the market, though a watchful eye should be kept on the products they are competing with.
For the long-term
future of the business, however, particularly if the alternative methods
of fastening garments are increasing their share of the market, the
button manufacturer may well need to develop into these alternative
methods of fastening garments. To do this effectively, a thorough understanding
of the wider market place would be essential.
It may be the case
that for some companies the market being segmented does not sit neatly
within their current structure and straddles two or more divisions. This
can occur when a business is structured along product lines and these
products are seen to compete with each other in one, or more, of their
markets. Although the preferred solution is to segment the market as defined
and therefore include the competing product lines, it may be that in the
first instance it is more pragmatic to segment that part of the market
currently satisfied by your product line, not forgetting to monitor the trends in the use of the products or services you have excluded.