The strategic nature of making target segment choices - Marketing Strategy

However, as has already been stated, segmentation is a strategic process where qualitative and creative judgements have to betaken. Opportunities have to be evaluated on their strategic fit. Not only do the assets and competencies of the organization have to have synergy with a particular market segment, but wider issues have to be considered as well.

Opportunities have also to be evaluated on the following somewhat subjective criteria:

  • Ability to allow the creation of a sustainable market position.
  • Compatibility with the corporate mission.
  • Consistency with the organization’s values and the culture. Segments that are a radical departure from current practice may challenge the prevailing values in the organization and the established status quo.The new segment may challenge the current power structure within the organization, which will create influential barriers to implementation.
  • Ability to provide a focal point for action and future development in the organization.
  • Ability to facilitate an innovative approach to market entry.
  • Ability of the current organizational structure to service the target market. Does this opportunity lie between two areas of responsibility in the current organizational structure? This may lead to the opportunity never being seriously addressed.
  • Compatibility with current internal information flows and reporting lines. Difficulties will arise where a segment does not sit easily with the current data collection or distribution systems. Segments in an innovative area may cause managers problems in terms of how to allocate targets and monitor progress. If this is linked to the problem already discussed under organizational structure, it may complicate issues such as areas of responsibility and reporting lines even further.

These factors of compatibility with the internal practices of an organization are likely to prove critical to the successful implementation of a new segmentation strategy. The newly entered segment has to have clear departmental ownership. Reporting lines and information flows have to be able to monitor its progress.

In short, individuals within the organization have to embrace wholehearted the development of the new segment or failure will follow no matter how attractive the segment or how well the organization’s overt assets and competencies might fit. A successful selection process will have identified a market segment or segments that are in alignment with the company’s assets and competencies and is also compatible with the wider organizational issues.


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