Column 1 · Strategy and Positioning · Era 1, Foundations (to 1969)
Market Segmentation
Formulation, content · Landmark · Cluster I, Strategic Choice
Description
Smith distinguished market segmentation from product differentiation as alternative marketing strategies, arguing that recognizing heterogeneous demand and adjusting offerings to distinct segments is a rational response to demand-side diversity.
Managerial Implications
Treat segmentation as a resource-allocation decision, not a marketing exercise. Define segments by what customers are trying to accomplish and what they will pay for, then choose the few you can serve better than anyone else. Resist the pull of serving everyone: a clear segment choice disciplines product scope, pricing, and sales effort, and tells your organization which customers it is allowed to disappoint.