Evaluating market segmentation approaches

Abstract

This article is concerned with managing and monitoring industrial market segmentation. The economics of market segmentation are overviewed, and an attempt is made to relate the segmentation tool to costs incurred. It is recommended that managers employ more economical methods of segmentation before using more costly parts of the marketing mix. A monitoring scheme is presented with two components that helps managers assess how well their segmentation strategy converts customers to the firm, meets market needs, and represents an efficient allocation of resources.