Customer segmentation has become a powerful marketing tool, improving the profitability of many companies. The concept suggests that customers can be divided into three groups based on common needs. Then, by customizing the marketing mix to meet those needs, suppliers can gain competitive advantage and save costs because they are only addressing ideal segments of the market. Customer segmentation is a concept that is covered in almost every marketing course and textbook, but, unfortunately, it is often misunderstood. In addition, very few marketing texts specify how exactly to go about segmenting a market. Whereas there are clear, accepted processes to create a balanced product portfolio or to manage customer research, there are no accepted processes to identify effective customer segments. As a result, very few companies use a consistent segmentation methodology in their day-to-day marketing. In addition, very few services marketing specialists have considered the unique issues involved in customer segmentation for information technology (IT) services markets. This UPDATE sets out to examine these issues.
Using the Power of Customer Segmentation in Service Marketing