In my view, segmentation is one of the most important concepts in Business and Marketing. Segmentation is about identifying a definable group of people or organizations that share a common set of needs in a common context. It sounds pretty simple, as it is nothing more than clustering people’s needs, but this task can be extremely complex in quick time.
As you segment the market and decide to provide a proposition to a particular segment, all the other entrants and existing players also will create their own propositions at various points. Imagine a market when there are already many players and the market is too fragmented. Imagine that you’re a businessmen when there is not much differentiation in the offering, and all of them are fighting on prices. The key is to re-segment the market.
I am not sure if this is used in the marketing vocabulary, but what I mean by re-segmentation is:
1. Get the customer data
2. Segment the market again
3. Identify the differentiated market offering for the segment.
This works because in any market the customer or consumer needs change. However, we need to know the extent of dissatisfaction and its affect withing the group and inter-group. Because when the markets are fragmented, then the impact of changes withing a segment spreads fast as all the people are at a similar level of satisfaction more or less. This brings in the necessity to not only understand your existing customers, but also to understand the complete market and resegment it based on various need gaps.
This form of re-segmentation helps to come up with differentiated offering in a fragmented market, rather than fighting on the margins and prices.