Regardless of the basis for segmentation, it is necessary to assess the viability of each segment. A useful segment should have the following characteristics:
- Identifiable
You should be able to identify potential customers in each segment and be able to measure the characteristics you have chosen for segmentation.
- Substantial
The segment must be large enough to be potentially profitable. The market segment must have the willingness and ability to purchase. The consumers in the segment must not just be interested in you but should have a high likelihood to purchase from you. Therefore, careful consideration must be given to both the number of customers available in a segment and the amount of their purchasing power. Whether a segment meets the substantial criteria is based on the company itself. Small companies may not need segments with millions of potential consumers, but large companies may. Nonetheless, from a relative perspective, it is usually not cost-effective to target small segments.
- Measurable
Measurability means that your segmentation variables are directly related to purchasing a product. You should be able to calculate or estimate how much your segment will spend on your product.
- Accessible
It sounds obvious, but you should be able to reach the segments effectively and economically via communication and distribution channels. If reaching the consumers in a segment is prohibitive, either in terms of cost or time, that segment may not be a viable one to pursue. Some segments may be inaccessible because of legal reasons but it is more likely that they are inaccessible because they cannot be reached at a reasonable cost to be profitable.
- Stable
For marketing efforts to be successful, a segment should be stable enough over a significant period of time to be marketed too strategically. That is, the segments must be stable so that the behaviors of consumers can be predicted and extrapolated into the future with a sufficient degree of confidence.
- Actionable
The market segment must produce the differential response when exposed to the market offering. This means that each of your segments must be different and unique from each other. So, if one segment is price sensitive, then consumers in that segment should respond favorable to a coupon promotion. If another segment values quality, then they should respond favorably to marketing efforts that stress the high quality of ingredients in the product.