Segmentation and customer insight in contemporary services marketing practice: why grouping customers is no longer enough

The bulk of market segmentation literature has concerned the generation of segments, with far less attention on what segmentation is used for - particularly surprising given the common speculations that the role of segmentation is changing due to CRM practices and the wider range of forms of custome...

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Bibliographic Details
Published inJournal of marketing management Vol. 25; no. 3-4; pp. 227 - 252
Main Authors Bailey, Christine, Baines, Paul R., Wilson, Hugh, Clark, Moira
Format Journal Article
LanguageEnglish
Published Helensburg Taylor & Francis Group 01.01.2009
Taylor & Francis Ltd
Subjects
Business management
Business practices
CUSTOMER ANALYTICS
CUSTOMER INSIGHT
Customer Relationship Management
Customers
Interviews
Management
MARKET SEGMENTATION
Marketing research
PROPENSITY MODELLING
SERVICES MARKETING
Studies
United Kingdom
United Kingdom > UK
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Summary:The bulk of market segmentation literature has concerned the generation of segments, with far less attention on what segmentation is used for - particularly surprising given the common speculations that the role of segmentation is changing due to CRM practices and the wider range of forms of customer insight which they enable. We explore market segmentation in the services and product-service systems context through twenty-five interviews in five UK-based companies, highlighting practical considerations in implementing market segmentation programs (see Young, Ott and Feigin 1978, for a similar early approach). Within this case set, market segmentation, using a variety of segmentation bases, is still regarded as essential for customer selection, proposition development and mass communication. Addressable and interactive communications with individual customers, though, are increasingly based on individualised customer analytics and propensity modelling, which aid the determination of the likelihood of uptake of specific propositions. Events and triggers informing companies of how to deal with customers individually are also considered to be particularly effective rather than simple allocation of the customer to a particular characteristic segment. Implications for theory and practice in market segmentation are outlined and further research is called for to explore this important area further.
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ISSN:0267-257X
1472-1376
DOI:10.1362/026725709X429737