Criteria guiding segmentation implementation: Reviewing the evidence

The benefits which market segmentation offers are well established, yet businesses continue to report implementation difficulties. Many complain about a paucity of practical assistance for those carrying out segmentation studies. The most common guidance available consists of simple checklists of criteria, such as those presented by Kotler who states that segments should be measurable, accessible, substantial and actionable. Despite widespread recognition of these criteria, such lists are limited in two ways. First, it is difficult to judge the completeness of such lists and second, insufficient guidance is given on exactly how and when the criteria should be applied. This paper comprehensively reviews and classifies the literature on segmentation criteria. The classification scheme highlights the diversity of published criteria and pinpoints when in the segmentation process they should be applied. A model is developed which illustrates the relationship between different types of segmentation criteria. The model highlights the contrasts and overlaps between different areas of the literature and helps set a research agenda. The paper concludes that criteria focusing solely on segmentation output provide insufficient implementation guidance. Three types of criteria are needed, focusing before, during and after the segmentation process. While the market segmentation literature gives considerable attention to the during and after stages, the discussion is confusing. Segmentation success factors which can be applied before the process begins are hardly considered at all.