“What about de-segmentation? What’s that for?”

MarketingRx –November 14, 2008

By Dr Ned Roberto with Ardy Roberto

Q: We read your recent column on self-segmentation. We never thought about market segmentation that way. That is, as a consumer behavior and not only as a marketer behavior. We were having a lunch discussion on this concept when someone reminded us that in one other previous column you were also talking about another segmentation idea, namely, “desegmentation.” The lady who reminded us said she read it in your column regarding Kartajaya’s Philippine Marketing Association keynote speech where he provoked the audience by saying that marketing is better off today if it gets rid of market segmentation.

Then another person told us that you actually talked about desegmentation in your last Blue Ocean Forum two months ago. He told us that the title of your talk was in fact “Market Segmentation, Self-Segmentation and Desegmentation.” In your column last Friday, you explained the first two but didn’t say anything about the third, that is, desegmentation.

So please tell us about desegmetnation. How useful is this for us marketing practitioners? What is it for? It seems to us that market segmentation and self-segmentation are enough for our segmentation requirements. A mystical sounding third called desegmentation sounds to us like a redundancy and even a contradiction.


A: The concept of “desegmentation” comes from the best seller and voted #1 strategy book of 2005 and 2006, Blue Ocean Strategy. That’s by W. Chan Kim and Renee Mauborgne, 2 professors from INSEAD, Europe’s leading MBA school. In chapter 5 of the book, Kim and Mauborgne explain desegmentation by defining it as follows: “Desegmentation is putting a stop to the pursuit of finer segmentation”… when you’ve identified a “product category non-customer” segment who when combined with the “current product category customer” segment surface a “common product category value” that can be satisfied with a new offering that will reach and “aggregate to a new much larger demand.”

Of course, every time we quote that we hear marketers say and ask: “Wow! That’s a whole lot. What does it mean?” It is a lot to chew and swallow. So read carefully and you’ll be amply insightfully rewarded.

Let’s start from what desegmentation obviously is not. It’s not doing away with segmentation. Unfortunately, that’s the most common first impression that our clients and students get from just reading this compound term. In forming the compound, desegmentation, the use of “de-” creates in the reader’s mind a negation of the term to which it is affixed. That is what happened to you and your business friends in your own impression of the contradictory connotation of the term. So if you want to understand the concept and put it to practical use, this misinterpretation is what you have to first unlearn.

This clears the way for understanding what desegmentation really is. Firstly, it’s about doing several levels of segmenting. It’s first a process of “finer and finer segmentation” of your total market. Secondly, it’s about knowing at what level of refinement to stop the process. And thirdly, it’s about stopping at the level where your best candidate PTM (primary target market) segment represents a source of “a new much larger demand.” It is this unique 3-step disaggregating of the segmenting process that is the outstanding contribution of Kim and Mauborgne to the strategy of market segmentation.

The idea of segmenting beyond the first level and refining down to the “behavioral segments” is not Kim and Mauborgne’s. That’s from the senior MRx-er’s Strategic Market Segmentation book. The logic of the process is simple. The first level segmentation is usually by socio-eco and demographic variables such as, for example, by socio-economic classes like Class AB (rich) segment, Class C (middle class) segment, Class D (borderline poor) segment and Class E (extreme poor) segment. Or by age, or by gender, etc.

To target any one of these first level segments and change its purchase or usage behavior, the marketer must ask: “Are the consumers in, say, the Class C segment the same in, for example, their sensitivity to pricing?” The answer will almost always be “no.” This means that for targeting and consumer behavior change purposes, that Class C segment should further be segmented by price responsiveness. When this is done, it will result, for example, in identifying an economy Class C price segment (whose consumers are immediately price sensitive), a premium Class C price segment (whose consumers are less price sensitive), and even a super-premium Class C price segment (whose consumers are not at all price sensitive).

Let’s have an example of the multi-level process of segmenting so we can continue discussing in the concrete. The senior MRx-er recently had a 3-day marketing consulting engagement with the Singapore government’s Civil Service College. In one half day of the 3 days, the consultant had a workshop session with the Health Promotion Board. One of the programs discussed during this session was the Board’s campaign to accelerate the acceptance and participation by Singapore company employees in the Board’s “Workplace Physical Activity Promotion Campaign.” The idea of developing a 3-level segmentation of the total market of company adult employees was proposed and taken up.

The Board was already segmenting at a first level by age. This identified 3 segments; (1) young adult company employees, (2) mature adult employees, and (3) post-mature adult employees. To get the 3 age segments into identifying each one’s “behavioral segments” called for going beyond this first level segmentation. In order to proceed to a second level segmentation, the Board members in attendance were asked to first answer this question: “Which segment among the 3 has the most need for the workout?” This was for setting priorities among the 3 identified age segments.

The Board chose the young adult segment. This segment became the subject of a second level segmenting. This time it’s segmenting by the working out behavior. This led to 2 identified behavioral segments: (1) the young adult company employees who are now working out, and (2) those young adults who are not working out.

Since the Board wanted to get to a “finer” third level behavioral segmentation, it had to prioritize the 2 just identified second level segments. To do this, the consultant the audience to answer this question: “Between the 2 segments, who is less difficult to reach and persuade about more regular or more intensive work outs?” The Board’s answer was “those now already working out.”

For the third level segmentation, segmenting was by “working out frequency.” The session on this yielded 3 third level behavioral segments: (1) those working out irregularly, (2) those are regular in their work out, and (3) those working out vigorously. To arrive at a prioritizing of these 3, the Board answered this question: “Among the 3 segments, who has the most need for help in their working out frequency?”

After some quick exchange of opinions, the Board members ended by choosing as its PTM (primary target market) segment those who are irregularly working out. Those following a regular work out schedule were designated as the STM (secondary target market) segment. The TTM (third target market) segment was the segment of employees who are vigorous in their work out frequency.

So as this example illustrates, repeating the responsiveness question for some other segmenting variables like product needs or benefits can bring the process to a next or another level segmentation. This particular level will identify what used to be popularly known as “benefits segments.” As our Singapore example shows, it’s possible to go on repeating but every time a marketer is tempted to make the repetition, the critical and practical question must first be answered: “Where do I stop? Is it in the next level of finer segmenting of the market or in this level?”

Here is where the Kim and Mauborgne “desegmentation rule” comes to a most welcome rescue and serves as a most useful decision handle. So in our example, we saw that the Health Promotion Board deciding to stop at the third level segmentation. At that level, it chose for its PTM segment, the segment of those young adult company employees who are already working out but doing so irregularly. Does this choice satisfy the desegmentation rule? That is: Is this the segment representing a source of “a new much larger demand?”

There was not enough time for answering the question with “facts and figures” and not just anecdotally. But one or two Board members mentioned that in terms of segment population size, the chosen PTM segment is known to make up the larger population size. There are also some experts’ opinions to consider. Psychologists and physical therapists working in the campaign hold that it is this young adult segment that promises more than any other segments a “multiplier effect” on other segments including mature adults and post-mature adults. Both of these 2 segments look up to the youth for healthy working out practices and reminisce about their own youth period when they were at the “pink of health.”

There was a final challenging and quite provocative question that was raised. It asked something like the following: “What about those other 2 segments of mature and post mature adults? This is a real problem with segmentation. As a government agency, we must reach all, everyone. That’s the democratic rule. The desegmentation and market segmentation rule violates the mandate of democracy. So how can all segments be reached?”

This basic objection to segmentation has been raised before. Government and non-government organizations who are struggling with the relevance of marketing in their work are particularly concerned about it. There have been different answers from marketing experts. Here’s the answer and explanation in abridged form from the consultant:

“The Rule of Democracy is usually interpreted as the Majority Rule. The logic assumes that if you reach and serve the majority, the minority will soon be reached and served as well. But the history of democracy tells us that this is rarely true. Once the majority is served, the minority is forgotten. And this is why Sir John Mortimer, the noted English barrister and playwright, came out with what we may call the Mortimer Rule of Democracy. It says: “The test of democracy is not that the majority should always get its way but how far minorities are respected.” Majority and minority. These are essentially market segments. And the Mortimer Rule is no different from the Segmentation Rule. So to reach both segments, follow the Mortimer version of the Rule of Democracy, which is the Segmentation Rule.”


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