In this in-depth paper, Professor Malcolm McDonald explores the full journey of market segmentation — from its academic roots through to real-world implementation and the future of strategic marketing. Written in three parts, this guide examines the evolution of segmentation theory, common pitfalls, and the step-by-step process of building segmentation models that actually work in practice.
Why It Matters
- Despite decades of theory, most segmentation projects still fail in execution
- Market segmentation is fundamental to strategic planning and competitive advantage
- The absence of effective segmentation leads to price wars, commoditisation, and poor ROI
Key Topics Covered
- A brief history of segmentation research and frameworks
- The difference between customers vs. consumers — and why it matters
- Why demographic and geographic segmentation are often misleading
- Micro-segments, critical purchase influences, and needs-based clustering
- Market mapping as a tool to uncover influence points in the buying process
- A 5-step process to develop strategic market segmentation:
- Define the market and build a market map
- Identify what is bought, where, when, and how
- Profile who buys using relevant descriptors
- Understand why people buy (benefits sought)
- Group buyers with similar needs into actionable segments
Insight
“Segment or die will be the mantra as we enter the second decade of the twenty-first century.” – Professor Malcolm McDonald
Download the Full Academic Paper
This summary outlines the core framework, but the full document includes essential diagrams, real-world examples, and detailed process charts.