See Part 1

Before getting into how one can think about the various ways to practically segment a market, let's first consider some key issues and questions:

First: Why should you segment by benefits, rather than the descriptors? There are three ways to answer this:

1. It's the only way to have a clear message in the market.
2. It's the only way to deliver what the customer wants.
3. Marketing academics have not been successful at segmenting the markets differently and still finding meaningfully different segments.

Does this mean that descriptors are not used in marketing? No, they absolutely are used, but for a different purpose.

To see this, consider the following very simple example and how benefits are powerful and descriptors are useful. Here we have two fictitious segments in the cereal market and two demographics (young and old) and a product line (in colored bold) for each segment. Notice how clean this is in terms of a message (i.e., the benefits) for each segment. Note also how the descriptors are useful for the specific products names.

Now, instead think about segmenting this market based on age (a typical way people might segment this market). What you would have is:

But what message will you have here; that is, what are the benefits the old and young want? You wouldn't know!

Think this is not relevant to your business market? Here's another real world example.

Typically firms that sell chips for cell phones (these are called DSPs) segment the market like this:

But what benefits are big and small firms looking for. It turns out that this market can be segmented (at the level of the application) as follows:

The point of these two examples is that by segmenting on the basis of age or size of firm you would miss the fact (in the cereal example) that there is a segment of both young and old people who want sweet and sugary cereals. We should note that age segmentation is rampant on the web and, as a result, the messages that internet companies have are muddled.

In the case of the DSP chips, segmenting by size of firm would miss the idea that within a given firm there might be both applications that are innovative (needing performance, support and upgradability) AND "quick and easy" (needing low price and turnkey solutions). Plus, by segmenting on size of firm you don't know what benefits to position your product on! That's the reason so many B-to-B companies have bland and amiguous positions in the market.

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