Multiple Segmentation: Benefits of Splitting Your Market

This article is an excerpt from the Shortform book guide to "The Marketing Plan" by William Luther. Shortform has the world's best summaries and analyses of books you should be reading.

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What is multiple segmentation? How does splitting your target market increase growth in business?

Market segmentation is when you divide your target market into multiple segments with a different product or message. In The Marketing Plan, William M. Luther encourages multiple segmentation because it offsets market decline.

Here’s a more in-depth explanation of why Luther is in favor of multiple segmentation.

How to Find a Noncompetitive Market

Luther suggests that you can have fewer competitors by finding segments in the market that are in the introductory life cycle stage. The process of multiple segmentation involves splitting your target market into different groups of customers and honing in on needs that are yet to be met.

Let’s explore how this would work for your tooth whitening product. You originally decided that your target market includes eco-friendly online consumers who want whiter teeth. However, because many competitors already cater to this market, your chances of gaining market share with your current product are slim. To counter this, you further refine your target market to include customers who want a flavored version of the product. Since this is something that other competitors don’t provide, you instantly increase your odds of success.

(Shortform note: Marketing experts expand on this by suggesting four ways to approach market segmentation: demographic, geographic, psychographic, and behavioral. Each way offers its own unique purpose—you’ll need to consider which way(s) will help you to meet your specific business goals. For example, there may be little value in segmenting customers according to their geographic location if you intend to sell and distribute your products and services solely through online channels.) 

Catering to Different Segments Offsets Market Decline

Further, Luther argues that the only way to maintain your share of the market and subsequent profits is to introduce different products and services into multiple market segments. This puts you in a position to maintain a large overall market share even when customer interest declines for some of your products and services.

For example, you enter the dental hygiene market by targeting the flavored tooth whitening segment and acquire a 25% share. You also introduce a new product into a different segment of the market—such as bamboo toothbrushes for the eco-friendly toothbrush segment—and acquire a 15% share of that segment. Over time, interest in your original product wanes, and your share of that segment drops to 20%. However, your second product maintains its position leaving you with a total of 35% market share.

(Shortform note: Business experts offer additional insights into why you should cater to multiple segments: It attracts a wider range of consumers and further promotes awareness of your brand. This increases your overall sales and provides financial stability even when faced with demand fluctuations—resulting in a secure position that allows you to compete more strongly in your industry. However, while this sounds good in theory, many companies have tried and failed to cater to different segments. You can avoid these pitfalls and increase your chances of success by analyzing the variables covered in this guide for each new market segment you intend to target.)

Multiple Segmentation: Benefits of Splitting Your Market

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Katie Doll

Somehow, Katie was able to pull off her childhood dream of creating a career around books after graduating with a degree in English and a concentration in Creative Writing. Her preferred genre of books has changed drastically over the years, from fantasy/dystopian young-adult to moving novels and non-fiction books on the human experience. Katie especially enjoys reading and writing about all things television, good and bad.

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