Identifying Market Segments and Selecting Targets

This chapter presents a usage-based approach to segmentation and targeting. The authors prioritize this approach to alternative approaches for two reasons. First, the segments that are identified using this approach require distinct marketing strategies, not simply different marketing tactics. When current customers are targeted, the goal is to retain these customers and, if possible, expand their usage. When competitors' customers are targeted, the goal is to offer a proposition that is sufficiently attractive to overcome switching costs. And, when non-users are targeted, the reasons for abstaining from category consumption must be addressed. Second, the usage-based approach focuses on the costs and potential return associated with pursuing alternative targets.