Despite the pervasive use of the terms "market segmentation" and "product differentiation," there has been and continues to be considerable misunderstanding about their meaning and use. The authors attempt to lessen the confusion by the use of traditional and contemporary economic theory and product preference maps.
M ARKETS have been segmented and products
and services differentiated for as long as suppliers have differed in their methods of competing for trade. The major advance in recent times has been that market researchers are using economic and behavioral theories and sophisticated analytical techniques in their search for better ways of identifying market segments and product differentiation opportunities. If sheer amount of statistical analysis and psychological jargon were the criterion, market segmentation could be judged to have shifted in status from an art to a science.
We therefore might expect that by now the basic purpose, definition of terms, and theory underlying market segmentation and product differentiation would have been consistently described and well understood. This is not the case. A review of 16 contemporary marketing textbooks reveals considerable confusion.
Five of the texts (Evans and Berman 1982; Mandel