Overview Market segmentation is foundational to marketing: as scholars and managers contend, its concept "is built into the fabric of marketing" (Gibson 2001, 21). Segmentation is the process through which a company's actual and prospect...
moreOverview Market segmentation is foundational to marketing: as scholars and managers contend, its concept "is built into the fabric of marketing" (Gibson 2001, 21). Segmentation is the process through which a company's actual and prospect customers are split into subgroups (i.e. segments), each of them showing similar consumption behaviors that differ across subgroups (Peter and Donnelly 2008). Differentiation (i.e. the process leading to variations of a company's offer) and targeting (i.e. the decision of which segments to serve by means of differentiated offers; Pride and Ferrell 2004) are meaningful only when customers have heterogeneous preferences, that is, only when a market is segmentable. Subdividing and profiling market segments help identify the customers to serve, the most effective way to satisfy their specific needs/desires, the competitors to face, the resources requested to compete in each segment, and the main stakeholders to involve in order to reinforce a company's market legitimacy (Cucurean-Zapan 2014; Lambin 1998). In simpler terms, market segmentation helps perform a company's market-orientation. While segmentation is still central to today's marketing, the profound transformations as much as the rising opportunities of contemporary markets and societies ask for a profound revision of segmentation theory and practice (Arnould and Cayla 2015; Gibson 2001; Kannisto 2016). Answering to this call, the chapter's aims are twofold. First, we approach segmentation historically, in order to unveil which were, and somehow still are, its often-implicit grounding premises. We show that most of these premises sway when confronted to extant cultural, economic, and technological environments, and invite for revision. The first part of the chapter (§ 18.2) thus provides readers with a longitudinal understanding of market segmentation and with evidences motivating the requested revision. Second, by focusing on contemporary trajectories of revision, we approach segmentation epistemologically, that is, we contrast two opposite perspectives on the needed revisions of market segmentation (§ 18.1). On the one hand, the marketing science perspective combines big data-driven consumer knowledge (cf. chapter 26 by Zwick and Dholakia) and the power of new technologies (especially, of artificial intelligence) to reinvigorate and transform segmentation (Mandelli 2018). Within this perspective, segmentation-as-science goes micro-basically, at a one-to-one level-and (hyper)targeting (Hoffmann, Inderst, and Ottaviani 2013) results into personalization, interpretable as the radicalization of mass-customization (Flavin and Heller 2019). On the other hand, hailing from the cultural marketing perspective (Peñaloza, Toulouse, and Visconti 2012), segmentation evolves into a set of decisions that marketers co-construct with customers. In line with this dialogical posture, targeting then requires conversational abilities (Jarratt and Fayed 2012) not only to reach, but also to engage target customers.
