History of Segmentation


Segmentation first arose as a marketing term one year before Sputnik 1 was launched into space. Wendell R Smith wrote in the Journal of Marketing in 1956:

“Market segmentation involves viewing a heterogeneous market as a number of smaller homogeneous markets in response to differing preferences, attributable to the desires of consumers for more precise satisfaction of their varying wants”.

Smith compared other product differentiation strategies to attempting to cut a layer of the marketing “cake” and knifing crudely across all parts of the market. Segmentation, meanwhile, he suggested was more akin to taking a slice: cutting vertically into one area of the marketplace and so producing: “a depth of market position in the segments that are effectively defined and penetrated.”

These ideas went off like an A-bomb in the late 1950s and early 1960s.  The world of Mad Men was predicated on hitting consumers directly in their aspirations. Manufacturers developed ever more complex iterations of the product “range”. Consumers got used to being targeted from cradle to grave.  A nerdy boy reading a comic would find adverts from Charles Atlas inside, telling him he could overcome bullies by subscribing to his exercise system.   A young girl would find adverts for toy Hoovers. A teenage girl would find adverts telling her how to “Get your man and hold him” by wearing the right brand of cologne. A teenage boy would still find adverts for Charles Atlas, alongside adverts for pimple removing creams, fake diplomas and record racks.

Okay, some of those examples speak of a lost era, especially when set against the arsenal of databases, complicated algorithms and psychometric surveys we use today. Now that the process of segmentation has become as aggregated, convoluted and fiendishly complicated as cloud technology can make it, it”s easy to congratulate ourselves for reaching an apogee of sophistication. It”s also easy to think that this such segmentation is a modern phenomenon.

Yet while the techniques are new, the essential principles behind modern segmentation are not. If you believe that segmentation is the art of finding out what people want and giving it to them, you might even argue that merchants carrying salt to farmers who needed meat have always followed this principle. And following on from that, you could say that segmentation has been around since before humans even learned to write.

[Read more…]