Practical considerations for a project's parameters

Either or both of the following refinements may be applicable to your project:

  1. Product/service range capabilities;
  2. Company structure considerations.
  1. Product/service range capabilities.

    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.

    The customer’s 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 company’s 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.

  2. Company structure considerations.

    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.