Market Segmentation in the 21st Century Discrete Solutions to Continuous Problems

Abstract

Market segments exist because of information and cost constraints If

manufacturers had accurate individual-level demand information and

the abllity to produce and deliver unique products at low cost, then

individual customization of products would be a viable market strategy

But as uncertainty about consumer demand increases and/or the cost

of customization increases, firms find it more profitable to reduce the

variety of the products they offer This paper reports on a critical

examination of trends in the analysis of customer data and in

reductions in the cost of customization brought about by inovations

such as the Internet and flexlble manufacturing systems. We conclude

that recent trends are not sufficient to support individual customization

in most product categories. However, despite the inability of these

trends to support individual customization, we predict several changes

In the dimensions surrounding successful segmentation strategies that

will be used by firms in the future.