The Two Sub-Stages of Marketing Segmentation:

A Clear and Simple Guide

When Philip Kotler, often hailed as the “Father of Modern Marketing,” first introduced his ideas on market segmentation, he laid the groundwork for a concept that has shaped decades of marketing strategy. Interestingly, while segmentation itself is widely discussed, Kotler’s approach outlined two critical substages that are often overlooked.

These substages have been adopted and refined by other academics, including Gilligan and Wilson, offering a consistent and practical framework for marketers to follow.

The Marketing Made Clear Podcast

This article features content from the Marketing Made Clear podcast. You can listen along to this episode on Spotify:

1. Identify Segmentation Variables and Segment the Market

This first step is where the real detective work begins. It’s about uncovering the dimensions that differentiate your target audience. The question is simple: “What makes one group of people different from another?”

Segmentation variables can be grouped into categories such as:

  • Demographics: Age, gender, income, education
  • Psychographics: Lifestyle, values, personality
  • Geographical: Location, climate, urban vs rural
  • Behavioural: Purchasing habits, brand loyalty, usage rate

The key here is creativity and relevance. For example, a company selling compostable dog products (as I know well from my own experience with Dogs Go Greener!) might segment its audience by values like sustainability or by behaviours such as purchasing raw dog food.

The Iceberg Effect in Segmentation

Many marketers make the mistake of staying on the surface with easily accessible data like demographics. However, the real gold lies beneath the surface, in psychographics and behavioural insights. These deeper variables provide the “why” behind consumer actions, which are essential for crafting meaningful messages.

“Stop thinking about segmentation as splitting your market into pieces. Start thinking about it as discovering the pieces that already exist.” – Will Green , 2024.

2. Develop Profiles of Resulting Segments

Once you’ve identified your segmentation variables and divided the market, the next step is to breathe life into your segments. This involves creating detailed profiles of each group, capturing who they are, what they need, and how they interact with your product or service.

These profiles should include:

  • A clear description of the segment: Think beyond “18-34-year-olds.” Who are they? Are they urban explorers who value convenience? Or eco-warriors hunting for sustainable solutions?
  • Key characteristics: What motivates them? What challenges do they face?
  • Actionable insights: How can your marketing strategy cater to their needs?

For instance, a profile of eco-conscious dog owners might read:

“Segment Alpha are millennials aged 25-40 who prioritise environmental impact. They prefer brands that offer compostable or sustainable products and are willing to pay a premium for ethical practices.”

The Magic of Storytelling in Segment Profiles

Creating profiles isn’t just about compiling data; it’s about telling a story. If your segment feels like a fictional character, complete with quirks and motivations, your team will find it easier to create campaigns that resonate.

“If you want to understand how a lion hunts, don’t go to the zoo. Go to the jungle.” – Jim Stengel

This applies to segmentation too. Get out of the spreadsheets and into the lives of your customers.

Why These Substages Matter

Why did Kotler, Gilligan, and Wilson focus on these substages?

Because segmentation is only as good as the work you put into it. By systematically identifying segmentation variables and developing profiles, you set a strong foundation for the rest of your marketing strategy. Whether you’re building personas, selecting target markets, or crafting positioning statements, the clarity gained from these steps is invaluable.

Closing Thought: Come Back to Segmentation Often

Segmentation isn’t a one-and-done process. Markets evolve, consumer behaviours change, and your understanding of segmentation must keep pace. It’s a bit like fitness, consistent effort yields the best results.

If you’re a fan of Marketing Made Clear (and why wouldn’t you be?), you know this topic is one I circle back to frequently.

As I always say: segmentation is the backbone of effective marketing.

Master it, and you’re already ahead of the game.