A Conceptual Model for Evaluating Segments Research Paper

A Conceptual Model for Evaluating Segments - Research Paper Example (1992), the evaluation matrix proposed by Sarabia (1996) and the strategy-aligned fuzzy MADM model proposed by Ou et al. (2009). All three models have departed from the traditional notion that statistical measures can be used to evaluate segments and have embarked on a more flexible and subjective (to the firm) or firm-specific approach to the segment evaluation. It is suggested by the analysis that a synthesis of these three models can potentially produce a holistic tool for evaluating segments; a tool which considers both the internal and external forces and which incorporates the firm’s specific needs. Introduction The evaluation of market segments is one of the most critical aspects in the entire segmentation analysis, given that the segments that are eventually selected by firms need to be attractive, measurable and substantial (Beane and Ennis, 1987; Sarabia, 1996). Segmentation is crucial because it provides a direction for marketing strategies to be developed; on the b asis of segmentation firms design specific marketing activities targeting clusters of the market which are share some degree of homogeneity and which are likely to respond in a similar manner to marketing incentives (Jonker et al., 2004). According to Wind (1978) and Ou et al. (2009) segmentation should be not only approached through statistical measures which only provide a picture of the differences between various segments, but more consistently should be approached through subjective measures as well, which denote the essence of the judgements of the decision makers and as Sarabia (1996) stresses, the distinctiveness of each firm (and each firm’s needs). Thus evaluation of segments becomes of crucial importance because it shows on the one hand the attractiveness of each segment identified but this attractiveness is measured by incorporating the specific-firm aspects as well. In this paper, three models for evaluating segments are presented and assessed in terms of their s trengths in an attempt to synthesize a theoretical framework for segment evaluation. Different Approaches to Market Segmentation Market segmentation is treated differently by many academic researchers and scholars. According to Beane and Ennis (1987) the existence of various approaches towards market segmentation reveals the different viewpoints on the subject. Market segmentation is often viewed as clustering the markets in an attempt to identify segments which can be profitable for business, but is also often viewed as simple categorization of the consumers in groups with no essential meaning attached to them. Segmentation can be treated on the basis of geographical data, psychographics, demographics and behavioural data. Other treatment of segmentation may be based on purchase occasion or even benefit clusters (Beane and Ennis, 1987). The different approaches to market segmentation eventually affect the marketing practices of firms in that they illuminate different dimensions of the customer base or the target segment. For example, a demographic segmentation may be useful in products for which consumption is largely dependent on the demographic data of the market, but unequally neglects other elements of the target market which may also have a close relevance to the consumption. According to Allenby et al. (2002) there are two primary differences in the treatment of market segmentation: the ‘ex ante’ and the ‘ex post’; the ex ante approach indicates an exploration of the drivers behind the consumers’ behaviour while the ex post approach indicates an investigation of the responses of the consumers’ behaviour in the various marketing offerings. In general the different market segmentati