Segmentation helps you to better understand consumer market by viewing the market "as it is" and not "as you wish it to be". It directs you towards the best strategic decisions - how to identify, measure, attract and keep customers.

Segmentation helps you to:

- Find out who your customers are; what their customer behavior is; what they see as the main value of the product; what their expectations are with regards to the product and its price; what their best preferred channels of distribution/sales are; how your company is perceived by them; what their lifestyle, values, psychological portraits are and how you can find other customers like them

- Define the positioning of your company and competitor companies/brands within each segment

- Define your company's potential in each segment

- Identify the segments that are valuable have best potential for development

- Track customer flow from one segment to another

- Monitor the success of strategies you have designed for specific segments

Segmentation can be applied when you are:

a. Establishing company's marketing objectives and goals

b. Creating the segmentation strategy

c. Positioning brand in the target segment

d. Developing marketing strategy for the segment (product, pricing, sales and communication strategies)

e. Forecasting the sales

f. Optimizing existing resources (including market, marketing, financial resources); taking advantage of competitor environment and company's strengths.

Segmentation by IPM Research

IPM Research has been implementing segmentation studies for fast moving products since 1998 and for service businesses (telecommunications, insurance and financial markets) since 2001. IPM Research is mainly applying ORACLE segmentation model, where segmentation is performed by two basic variables - customer demands/the product's customer value and customer psycho-demographics. This is the most market oriented approach, which has been proved in time and practice: a product's success depends on how well it can satisfy customer demands, how well it matches with the customer's personality, values, lifestyle, how convincing the product's communication with the customer is and how strong the relationship between the product and the customer is.

In essence, these are branding-related issues that cannot be solved without studying the customers' psycho-demographics. The basics of brand perception lie in the customer's psycho-demographics, values, relations with the outside world and orientations.

During this research process IPM Research has worked out and tested about 400 psycho-demographic provisions describing 35-40 psycho-factors. These provisions are included in the depending on the extent to which they describe the category of the research product. Obviously, various psycho-factors are taken into account during description of customer behaviour for fast moving goods, financial products or telecommunication products.

In every particular case, basic segmentation variables are being determined by applying different analytical functions. This could be a simple geographic, social-demographic segmentation or a segmentation based on composite variables - for example, customer's financial behavior that includes a combination of several different variables (attitude towards money, spending practice, formal and informal savings, borrowing practice, sources of income, etc.)