Despite endless buzz about data, digital and AI, market segmentation remains the single most critical factor in achieving profitable growth. In this sharp and myth-busting white paper, Professor Malcolm McDonald cuts through decades of confusion and reminds us that without needs-based segmentation, marketing efforts are doomed to fail — especially in B2B markets.
Originally written for Professor Philip Kotler’s World Marketing Summit in Japan, this paper reframes segmentation not as a marketing add-on, but as the engine of shareholder value creation.
Core Arguments
- Segmentation drives shareholder value: The only way to beat the cost of capital is by offering the right value to the right customer segments
- Most firms still get it wrong: 90% of plans reviewed by Malcolm lacked true needs-based segmentation
- Old-school labels are meaningless: Socio-demographics and purchase volume don’t predict behaviour
- True segmentation is behavioural: Based on what people do, how they buy, and why — not who they are
Included Models and Insights
- Enterprise Value and Shareholder Value Added (SVA) linkage maps
- Examples of real customer segment behaviours (e.g. “Sunworshippers”, “John & Mary Lively”)
- CRM and digital marketing failures linked directly to poor segmentation
- References to 50+ years of segmentation scholarship, including Wind, Yankelovich and Christensen
Malcolm’s Conclusion
- New technology hasn’t made segmentation obsolete — it’s made it more essential
- Digital marketing only works when it’s built on solid, segment-specific strategy
- Needs-based segmentation must guide your targeting, positioning, messaging and metrics
Insight
“Suffice it to say that any organisation that embarks on any segmentation path other than needs-based segmentation is doomed to waste an awful lot of time and money.” – Professor Malcolm McDonald
Download the Full White Paper
This summary captures the argument — the full document includes buying behaviour data, segmentation frameworks, and critiques of common marketing errors still seen in today’s plans.