Market Segmentation in Practice: Review of Empirical Studies, Methodological Assessment, and Agenda for Future Research

Abstract

Although segmentation decisions are critical for achieving differential advantage in an increasingly competitive marketplace, the empirical investigation of how segmentation decisions are actually conducted by firms in business practice has not been a major focus of extant research. Accordingly, the purpose of this paper is threefold: first, the identified empirical studies are assessed in terms of their methodological characteristics in order to establish the soundness of extant empirical evidence on firms' market segmentation practices. Second, findings relating to all stages making up the market segmentation process are reviewed and contrasted with normative segmentation literature to identify issues of agreement and divergence; discrepancies imply either lack of familiarity with and confidence in normative guidelines or difficulties with the implementation of these guidelines into actual business practice. Third, based on disclosed research gaps relating specifically to each stage of the market segmentation process, a navigation chart for future empirical research is developed to encourage further study in those areas that have been insufficiently addressed by extant research.

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