Exploring the Construct of Segmentation Effectiveness: Insights from International Companies and Experts

Abstract

In the past two decades, the concept of international segmentation has received increasing attention in the strategic marketing literature. However, although segmentation decisions are critical for achieving competitive advantage in an increasingly globalizing marketplace, there is a lack of a sound measurement instrument capturing the effectiveness of international segmentation decisions. In this study, we conduct in‐depth interviews with international companies and external experts and identify a reliance on bottom‐line measures which, however, inadequately capture the effectiveness of segmentation. Based on the interview material as well as the extensive literature on segmentation, we subsequently conceptualize segmentation effectiveness as a multidimensional construct, capturing four core dimensions of segmentation success (namely targeting performance, positioning performance, cost reduction and increased adaptability to environmental uncertainty). A formal measurement model to operationalize the construct is also proposed as are suggestions for further research on the topic of segmentation effectiveness.

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