Editing Market segmentation (section)

=== Hybrid segmentation ===

One of the difficulties organisations face when implementing segmentation into their business processes is that segmentations developed using a single variable base, e.g. attitudes, are useful only for specific business functions. As an example, segmentations driven by functional needs (e.g. “I want home appliances that are very quiet”) can provide clear direction for product development, but tell little about how to position brands, or who to target on the customer database and with what tonality of messaging.

Hybrid segmentation is a family of approaches that specifically addresses this issue by combining two or more variable bases into a single segmentation. This emergence has been driven by three factors. First, the development of more powerful AI and machine learning algorithms to help attribute segmentations to customer databases; second, the rapid increase in the breadth and depth of data that is available to commercial organisations; third, the increasing prevalence of customer databases amongst companies (which generates the commercial demand for segmentation to be used for different purposes).

A successful example of hybrid segmentation came from the travel company TUI, which in 2018 developed a hybrid segmentation using a combination of geo-demographics, high-level category attitudes, and more specific holiday-related needs.<ref>“Hybrid segmentation in the travel category by TUI”. Presented by TUI at POPAI Retail Marketing Conference, 7 February 2019. https://www.popai.co.uk/boxfile/documentdetails.aspx?GUID=a966736b-5961-4409-bba1-9d5afa224cf9</ref> Before the onset of Covid-19 travel restrictions, they credited this segmentation with having generated an incremental £50 million of revenue in the UK market alone in just over two years.<ref>“Facebook’s segmentation abilities are depressingly impressive”. Article by Mark Ritson, Marketing Week, 9 Nov 2017. https://www.marketingweek.com/mark-ritson-facebook-segmentation/</ref>