Benefit Segmentation: A Decision-Oriented Approach 03/28/2015
Historically, the first type of segmentation to exist was geographic segmentation. As more and
more brands became national, demographic segmentation became popular. Recent studies have
shown, however, that demographic variables such as sex, gender, income, occupation, etc. are
generally poor predictors of behaviour and less than optimum bases for segmentation strategies.
Most recently, the third type of segmentation is volume segmentation. The so-called “heavy
half” theory points out that in most product categories, one-half of the consumers account for
roughly 80% of the consumption. If this is true, these high-volume consumers are a company’s
most valuable consumers.
Segmenting consumers by volume isn’t always feasible because the entire “heavy half” segment
are not exclusive to a single brand or class of product.
Each of these three systems of segmenting are handicapped by an underlying disadvantage
inherent in its nature – all are based on an ex-post facto analysis of the kinds of people who make
up various segments of a market. They rely on descriptive factors rather than casual factors.
This approach targets past or current consumers’ behaviours, when it is future buying behaviour
that is of utmost interest to consumers.
Benefit segmentation identifies market segments by casual factors rather than descriptive
factors. The belief underlying this segmentation strategy is that the benefits which people are
seeking in consuming a given product are the basic reasons for the existence of true market
segments. Benefits sought by consumers determine their behaviour the most effectively out of
the above three segmentation strategies. The other segmentation strategies are very beneficial to
use after the benefit segmenting.
It is the total configuration of the benefits sought which differentiates one segment from another,
rather than the fact that one segment is seeking one particular benefit and another quite a
The benefit segmentation is of particular interest because it never fails to provide fresh insight
Generalizations from Benefit Segmentation Studies
It is easier to take advantage of market segments that already exist than to attempt to create new
No brand can expect to appeal to all consumers. Attracting one segment may alienate another.
A company’s brands can sometimes cannibalize each other but need not necessarily do so. It
depends on whether or not they are positioned against the same segment of the market.