Five major steps are involved in dividing markets into meaningful segments, although these steps and their description may vary from one situation to another.
a. Define and analyze the market - determine market parameters (based on characteristics that may include or exclude customers from a group) within organization’s mission and business definition, as well as its strategic intent.
b. Identify and describe potential segments - decide on the most useful dimensions or variables for selecting members of potential market segments; then aggregate customers into homogeneous groups, develop a profile of the characteristics of each group, etc.
c. Select the segment(s) to be served - select segments by evaluating against predetermined criteria, then rank according to the organization’s ability to serve the market profitably while providing customer satisfaction.
d. Determine the product positioning strategy - determine the best “fit” between a product and a market according to features most desired by customers; consider competitors’ positioning strategies, organizational goals, and the market situation.
e. Design and implement the marketing program - develop a tactical plan (marketing mix) and determine objectives for the marketing program; all elements of the marketing mix must be consistent with the selected positioning strategy.
