Segmentation Process

Step 1: Group consumers according to their “needs”, “benefits” they seek from the product and occasions they use the product. Example, shampoo users:•Segment 1: people who care about hair loss

•Segment 2: people who care about hair smell

•Segment 3: people who care about hair style

Step 2: Do a persona analysis. Identify a typical consumer from each segment based on demographics (age, gender,

location) and lifestyles (hobbies, spending habits,

media use, etc.).

Step 3: Asses the attractiveness of each segment•Segment size•Availability of the alternatives for the segment

•Segment growth rate•Segment profitability•Segment match with the brand•Strategic importance of the segment

Selection of Target Segments

New Target Segment

Market PenetrationFocus on the same

segment or a segment similar to your current customers. Get more of

the same type of customers.

Market DiversificationFocus on a segment you

have never targeted before. Get different types of customers.

Persona Analysis Example

Meet Hanako Yamada… (a typical member of the target) She is 35 and lives in downtown

Yokohama with her 2 children and her husband.

She is a housewife and she takes flamenco lessons on weekends.

She reads Elle. She doesn’t read any newspapers. She watches London Hearts and she is a fan of Kimura Takuya.

She has a Mixi account. She also uses Cookpad once a week.

Her household income is 800 万 a year and she drives a minivan.

She buys her groceries from Daie and Costco. She spends 10 万 every month on fashion clothes.

Etc. (Image source: Microsoft)