|September 5, 2015||Comments Closed|
Market Segmentation Study
“Birds of a feather flock together.” Human beings do the same thing. Market segmentation involves dividing a broad target market into relevant subgroups that have, or are perceived to have, common needs or interests. Market segmentation helps an organization to identify and define their optimum target consumer.
By understanding the “psychographics” of category consumers, as well as their demographics, we can help you zero in on the consumers who can have the greatest impact on your business.
Cluster Analysis is often used as part of a segmentation study. This is a statistical process which attempts to determine which “birds of a feather” are actually flocking together. Multiple solutions are attempted, with each solution using a higher number of segments.
For example: the first attempted solution might have 3 segments (i.e. Republicans, Democrats, & Independents). This solution holds up very well. We then push it to 4, then 5, then 6 segments,…until the clusters fall apart. At this point, we go back to the solutions that didn’t break apart to isolate the psychographic differences within the population.