Development of a taxonomy of strategic market segmentation: a framework for bridging the implementation gap between normative segmentation and business practice

Even though market segmentation is one of the most established concepts in marketing, there are still some shortfalls in the body of research, which create a gap between theory and practice and lead to failure in the implementation of segmentation. The concept of strategic segmentation is specified as key in resolving these issues. It is shown that in any form of strategic segmentation, the following two questions need to be answered consistently: What is the objective of performing market segmentation? Which unit of analysis will be selected for the segmentation? Based on empirical findings, a taxonomy of four market segmentation strategies is developed that addresses these shortfalls. The findings show that segmentation can be induced from the customer as well as from the market; but most importantly, there has to be consistency between the objective and the unit of analysis of a market segmentation. These findings provide both useful managerial implications as well as a framework for further research.