When to Retire, Refresh or Retain your Market Segmentation

This article was written by Hilary DeCamp, Chief Methodologist at Material.

Sometimes clients ask, “Should we redo our segmentation?”

The best answer is “it depends,” because at any point in the life of a segmentation, there are choices:

(1) retire and redo

(2) refresh and reframe, or

(3) retain and reinvigorate

A segmentation’s useful life is dependent on how quickly the category is changing and whether your strategic priorities have changed; these issues should guide the path forward.

When to Re-Do Your Market Segmentation Studies

First let’s look at the issue of category change. Sometimes a new product introduction is so disruptive that it changes the category entirely, invalidating the old view of the market, requiring you to retire your existing segmentation. Imagine a transportation segmentation that relies on your frequency of taxi travel as a defining trait… this framework would have been entirely disrupted by the entrance of Uber. In the short form typing tool, you can’t just change “taxi” to “paid ride via taxi, Uber, Lyft, etc.” since the shared ride services fundamentally changed who uses paid rides, why and how often.

Technology categories are, of course, the most susceptible to obsolescence in response to new inventions. But many other categories are also impacted by changes in the technology sector (such as music buying, movie viewing, car shopping, use of maps). I recall a client who asked us to redo their computing segmentation since one of their high priority segments, “Netizens,” had grown to be nearly half their market. How is this possible?  “Netizens” were essentially anyone who used the internet, which in the 90’s was a great surrogate for tech-savvy early adopters, but not so just 5 years later! I fear I age myself by revealing how long I’ve been doing segmentations…

Even when the category shifts are not technology-linked, they can be seismic in proportion. Major events like 9/11 or COVID-19 can stimulate change immediately to related categories like air travel and grocery shopping. Alternatively, long-term trends like sustainability, authenticity, and personalization can gradually yet definitively make a segmentation ready for the retirement home. For example, several of our clients recognize the need to rethink the role of “buy organic” in their segmentations, as this trait has gone mainstream. Does drinking almond milk say the same thing about you today as it did five years ago? What about watching short-form video?