Market Segmentation: Finding the Consumers That Matter



Your company has developed a new product: noise-canceling headphones that are lightweight and less bulky than common noise-canceling headphones. The product looks and sounds good, but management has many questions: When is the best time to introduce the product? Which retail channels should be utilized? Where should you advertise? And what price should be charged given the array of competitive audio products in the marketplace?


It is easier to address questions about product introduction, advertising, promotions, pricing, and distribution channels if you know about the consumer groups that will be most interested in the product. Identifying consumer groups is what is meant when we use the term market segmentation. Identifying market segments is important because information about the identified market segments may be used in product development, advertising, promotion, and price setting.


Market segmentation is vital to many organizations because information about market segments guides marketing strategy and tactics.

Many organizations employ target marketing, paying special attention to customer segments that have been identified as most loyal or most likely to purchase products and services. Market segmentation is the process of identifying these segments. Also, in pursuing new customers, organizations can use information about segments to identify consumers in segments most likely to purchase products or services for the first time.

In general, there are five key best practices to keep in mind:

  • Focus on goals.
  • Look for unique values to create segments.
  • Analytics are key.
  • Take measured to avoid segmentation bias.
  • Continue identifying subgroups to further refine efforts.


Want to learn more?

Could you do your job better if you knew more about consumers in general, that is, the potential customers for your product or service? The Accenture Academy course Introduction to Market Segmentation presents the market segmentation process and identifies the data and variables that are of importance. You will explore how to prepare and organize the relevant consumer information as well as the software tools used to analyze the information. Finally, you will examine clustering solutions and the importance of selecting the best one to help plan your organization’s marketing strategy.

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