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TMCVocabulary

How to Define a Market Segmentation Map

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By Geoff Anderson

How Strategic Marketing Course Concepts Apply
From the course, our cross-functional team of managers had seen that a Market Segmentation strategy is analogous to a map of the world.  With a market model you can think of mapping the world by continent, then by country, then by city. 

We started by thinking of our broad segment categories of USES, or applications, as continents.  The idea of countries within continents allowed us to think of USE sub-segments.  For instance, if Semiconductor is a continent, then some natural countries within that continent (sub-segments) would be bare wafer inspection, semiconductor material properties, front end of line characterization (device level), and back end of line inspection. To get to the city level we felt we could gain insight leverage by employing a dimension that described communities of instrument users.

The addition of a USER or Community dimension to our segment model thinking was a real breakthrough.  One benefit of this thinking was that it formalized the goal of understanding “who” is using our product, their professional and business objectives, not just the “what” of the application.

Strategy

Through extensive team review of detailed sales history, our first decision was to define a rational set of segments that encapsulated a majority of our customer’s applications or USES.  As we have a strong presence in leading edge nanotechnology research, we realized that we needed to have one “open” segment to allow us to flag new and unknown applications of our products.  However, once we realized that, it was easy to identify 4 broad segments.  Once we identified the continent segments, we chose 4 – 5 country sub segments that further stratified the segments (see table below).  These sub-segments started to point to areas of interest for new product development.