248 The Marketing Book
meant that marketers are more able to analyse
customer behaviour at an individual level, and
they increasingly aim to be able to cultivate
long-term relationships with those customers
who contribute most to the financial position of
the organization. In this way, there has been
much attention devoted to concepts of relation-
ship marketing, customer relationship manage-
ment (CRM) and one-to-one marketing. It has to
be said that much of this is rhetoric rather than
reality, as is discussed later.
The next section outlines what are sug-
gested as being the main criteria for segmenta-
tion to be effective.
Segmentation criteria and categories
Segmentation involves identifying homogene-
ous buying behaviour within a segment (and
heterogeneous buying between segments) such
that each segment can be considered as a target
for a distinct marketing mix.
Criteria for segmentation
To help with this process, potential segments
should satisfy a number of criteria (Frank et al.,
1972). The four main and nine sub-criteria are
(Van Raaij and Verhallen, 1994):
1 Typifying the segments:
Identification. Differentiation of segment
from other segments.
Measurability. Identification of segments in
terms of differences in individual and
household characteristics or other
‘measurable’ characteristics should be
possible.
2 Homogeneity:
Variation. Heterogeneity between segments
in terms of behavioural response (Engel et al.,
1972).
Stability. Although this criterion suggests that
segments should be relatively stable over
time and that switching of consumers from
one segment to another should not be
frequent, the use of data mining tools allows
the identification of individuals’ changed
circumstances or behaviour, such that they
can now be switched from one target group
to another.
Congruity. Homogeneity within segments in
terms of behavioural responses.
3 Usefulness:
Accessibility. Segments should be accessible in
terms of communications media and
distribution outlets. This means that it must
be possible to reach the segment.
Traditionally, this meant the selection of
those advertising media that match the
segment’s media profile in demographic
terms, or selecting appropriate distribution
channels, again through a matching of
demographic profile with the equivalent
profile of those most likely to frequent
different types of retail outlets. Increasingly,
however, especially since around the start of
the 1980s, more sophisticated market
profiling and targeting dimensions have been
deployed. The date is significant because it
reflects the first use of the national census
for marketing purposes, as is explained later.
Substantiality. Segments should be of
sufficient size to enable specific marketing
actions. This does not mean that segments
need to be especially large, but profitable
enough to have distinct marketing mixes
aimed at them. Again, as we will see later,
new ‘marketing metrics’ have facilitated
greater sophistication in calculating not
only the most profitable segments, but
even the most profitable individual
customers.
4 Strategic criteria:
Potential. The segments should have enough
potential for marketing objectives, e.g.
profitability.
Attractiveness. Segments should be
structurally attractive to the producer, e.g.
create a competitive advantage for the
company (Porter, 1979).