Question

Consider the following segmentation basis variables and note potential strengths and weaknesses of employing each in a segmentation framework:

a. Demographics

b. Technology

c. Culture of technology adoption

d. Perceived value subject to industry standards

e. Point of technology adoption of the customers' customers

Answer 1

Segmentation basis variables…strengths and weaknesses:

DEMOGRAPHICS:              

Strengths          

Data are usually most available for demographic groupings–by size of company, SIC or NAICS, geographic location, etc., because governments and trade associations usually collect data this way.            

                        Weaknesses

The biggest problem with demographic bases for segmentation is that they are seldom related to differences in value sought.

                      TECHNOLOGY EMPLOYED:

                        Strengths

Data are very often available organized by type of technology employed in processes or products. When customer needs are related to the type of technology they use, then these data will closely reflect useful segmentation. In addition, if the technology evolution can be forecasted, then this will translate into segmentation evolution, as well.

                        Weaknesses

There can still be a great deal of variation in needs and buying behavior within groups formed around technology used.           

           

                   CULTURE OF TECHNOLOGY ADOPTION:

                        Strengths

Related to TALC; adopter types have consistent patterns of behavior and needs.

                        Weaknesses

Hard to collect/measure correctly. This will usually require primary data collection. Even then there are segments and niches that exist within the adopter types.

                   PERCEIVED VALUE SUBJECT TO INDUSTRY STANDARDS:

Strengths

Can align needs/wants to benchmarks. Groups are based on value, rather than some proxy variable(s).

Weaknesses

Will require primary data collection or extensive and possibly questionable assumptions. May focus segmentation and strategy on current status quo, rather than focusing on future segments or segments that can be created by “changing the rules.” Also, standards may be in flux or inadequate and hence segments will change as better standards emerge.

Point of technology adoption of the customers’ customers:

Strengths

Reflects differences in needs at different points on the Technology Adoption Life Cycle.

Weaknesses

Difficult sometimes to determine where on the TALC the group is. Needs may still vary among companies located at the same point on the TALC, particularly in the Bowling Alley.

Please rate well