What is a Segment Strategy?

By | May 29, 2014
This entry is part 16 of 31 in the series Defining words

In my previous posts on business strategy I talked some about business-unit strategy.  Sometimes a business unit is focused on a particular market.  If an organization wants to create a strategy for a market segment, but for whatever reason doesn’t want to create a business unit around it, then what do you call it?

I call it a “segment strategy”.   The customer segment being important enough to warrant executive leadership (and a strategy) but not important enough to warrant a business unit.  In banking, a “Retail” business unit is typically broken down into broad customer segments such as Ultra High Net Worth (UHNW), High Net Worth (HNW), Affluent and Mass.  These, being broken down further into micro-segments on the way to nirvana where every customer is “a segment of one”.

The segment strategy inherits all of the business-unit strategy content that is general across all customer segments.

A segment strategy provides all the product-market strategies for a broad customer segment, including the 4 P’s.  then it amends the business-unit strategy as needed for the customer segment.  For a retail banking business unit this would include things like how to attract, organize, use and retain key skills such as local/regional private banking and SME expertise.

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