Every industry is striated with various kinds of customers. A lot of companies only start the segmentation process by determining the types of clients which are currently being served. By taking the next step to classify your client base, the process actually starts to produce tangible, usable info which might help direct a wide range of external and internal areas which are important. These areas include company core competencies, skill sets, product development, competitive advantages, and market selection to name just a few. When speaking of a segmentation strategy for your company, this strategy crosses over traditional boundaries set inside the business.
It can take into account other important issues like market demographics, sales channels, operational implementation, and adaptable approaches to niche markets currently being served or targeted. A lot of companies aren’t conscious of their very own segmentation strategy that they’ve implemented. It’s developed over an amount of time as the company has grown. It’s happened without forethought or a conscious effort to develop a strategy. By planning a segmentation strategy, company owners and managers can see more opportunities develop from non traditional core markets. The focus is in fact widened to foster growth within current core markets as well as develop traditional and non traditional niche markets.
A lot of companies choose to segment their business according to market, some according to pricing structures and discount rates, still others by client class or product lines. These are simple to recognize and are usually the segmentation strategy that occurs by business inertia. The concentrate on traditional core markets tend to drive most strategic planning sessions since the comfort level is acceptable. By dealing with the devil you know in place of the devil you do not, managers allow the core market sales channels to dictate future thinking and company direction. Adapting to market niches present other opportunities. Today’s product might fit the current client base, however this will only be true until a better mousetrap presents itself.
When managerial scope is limited only to the core market, core client base and current sales channels, the desire to explore smaller niche markets also becomes limited. As a corporate culture, this could frustrate owners and top level managers for many years at a time. Core competencies should be thought about when a segmentation strategy is being developed. Corporate skill sets might include a tremendous capability to acquire other companies, but have little knowledge of product development needs within markets being currently serviced. It might be claimed that mid level management should manage this area, but conversely they still have to be managed to have forward progress regardless of what level they function within. Managerial skill sets vary with the individual. When objectives are focused and account is taken into account for both corporate and individual core competencies, the business could make forward progress.