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Manage Customer Segments

Over the past decade, customer segment management has escalated into a topic of major importance. This essay tries to analyse the factors that impacted companies’ ability to manage customer segments, expound its roles, and urge companies to strengthen customer segment management.

Today’s marketing environment is becoming more sophisticated and proliferating. The phenomenon of market polarization is one of the most important challenges which companies should respond to. As Knudsen et al. (2005) pointed out, more and more middle-of-the-road products and services are being squeezed from many industries, while the growth rates of high end market and low end market are so strong. Facing to this changing environment, a company has to make a choice – “focus on one of the market’s extremes and concede ground elsewhere or learn to serve both premium and value customers” (Knudsen et al., 2005). Stråberg, the CEO of Electrolux, who has achieved to success in selling high-end and low-end products in the same channel, thought that the middle market was just on the verge of disappearing, not really vanished (Knudsen & Riiber, 2006). However, other practitioners like Bosch, Sub-Zero, Viking, Haier, Nokia gave different answers (Knudsen et al., 2005; Knudsen & Riiber, 2006). Market polarization is a megatrend. In front of this fickle social structure, it is very difficult to measure the extent of customer migration. It is important for marketers to manage customer segments effectively according to the environmental threat.

Customer needs are heterogeneous. The fact that large number of brands means customers could seek for different product benefits. Since the mass market is split into a multitude of demographic, socioeconomic and behavioural fragments, customer needs, desires and expectations must be (re)understood by marketers. Doole et al. (2005) argued that one of the advantages of the strategies of market segmentation for marketers is to meet the demands of customers in...