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EJM
50,12
2192
Received 28 August 2015
Revised 25 February 2016
27 June 2016
Accepted 9 September 2016
European Journal of Marketing
Vol. 50 No. 12, 2016
pp. 2192-2215
© Emerald Group Publishing Limited
0309-0566
DOI 10.1108/EJM-08-2015-0585
A resource-advantage theory
typology of strategic
segmentation
Andrew T. Thoeni
Department of Marketing, Jacksonville University,
Jacksonville, Florida, USA
Greg W. Marshall
Crummer Graduate School of Business, Rollins College, Winter Park,
Florida, USA, and
Stacy M. Campbell
Department of Management, Kennesaw State University, Kennesaw,
Georgia, USA
Abstract
Purpose – The purpose of this paper is to define a typology of strategic segmentation accounting for
antecedents (potentially conscious or subconscious) that influence marketing managers’ practice of
strategic segmentation, thereby formulating a new theoretical basis to bridge the current theory–
practice literature gap in strategic segmentation.
Design/methodology/approach – Based on the resource-advantage theory, this paper defines a
typology of strategic segmentation that depicts how a firm’s access to imperfectly mobile resources
relates to the marketing manager’s assumed heterogeneity of the market and to the manager’s approach
to the market.
Findings – The authors postulate a typology of firms’ strategic segmentation and approach to the
market that is heavily influenced, and potentially limited, by the firm’s available resources to effectively
segment and address the market.
Research limitations/implications – The typology suggests that resource availability affects a
manager’s view and approach to the market. Therefore, testing of this typology should be performed to
provide an empirical basis for a taxonomical foundation of strategic segmentation. Empirical testing
should examine whether: resource availability is directly related to managers’ views of market
heterogeneity, resources are negatively correlated with market approach, market-based intelligence
(customer needs) are linked to the market approach, and there is relationship between a firm’s position
within the typology and its long-term performance.
Practical implications – This paper provides an understanding that a manager’s knowledge of
resource availability may be strategically counter-productive when creating a strategic segmentation. This
limitation may lead to short-run choices for segmentation and market approach. Managers should, therefore,
consider their strategic goals both with and without limiting their view based on current resources.
Originality/value – This paper provides the first typology of strategic segmentation by considering
theoretical foundations of business that could bridge the often-noted theory–practice gap of segmentation.
Keywords Marketing strategy, Resource-advantage theory, Market segmentation, Typology,
Segmentation analysis, Strategic segmentation
Paper type Conceptual paper
Introduction and purpose Resource-
Given the mature history of decades of published work extolling the advantages of advantage
segmentation, one might reasonably expect marketing managers would be
well-informed to maximize the utility of segmentation; this is not necessarily the case.
theory
Recent industry surveys indicate many firms are ambivalent to the customer insights typology
and the benefits to strategy execution that effective segmentation could bring. For
example, McKinsey & Company found that 51 per cent of firms surveyed were not 2193
focusing on customer insights, segmentation or targeting (Brown and Sikes, 2012). On
the implementation side, Bain & Company found that only half of the management
teams change products to meet the demand of customers (Allen et al., 2005). Academic
research also indicates that firms do not approach segmentation and its implementation
in ways consistent with extant segmentation theory (Day, 2011). We find this potential
for underutilization of segmentation best practices to be enigmatic.
Although there has been considerable research into the broad topic of segmentation,
a large portion of published articles has focused on segmentation methodology, ranging
topically from how to use logit, conjoint, Bayesian and neural network models to the
various means of selecting variables to use in the models. In contrast, few articles have
focused on segmentation as a strategic topic (Wen et al., 2012; Kim and Lee, 2011; Bigné
et al., 2010; Van Hattum and Hoijtink, 2009; Gupta and Chintagunta, 1994). As Quinn
and Dibb (2010, p. 1,241) describe:
[…] while marketing managers have prioritized how segmentation outputs can be
implemented in practice, academic researchers have been preoccupied with the choice of
variables and multivariate techniques available for the analysis and validation of that output.
Others have called for more managerially relevant work in segmentation to include
segmentation strategy (Wedel and Kamakura, 2002; Day, 2011), alignment of
segmentation planning to execution (Day, 2011) and better addressing the existing gap
between segmentation theory and practice (Dibb and Simkin, 2009; Goller et al., 2002;
Quinn and Dibb, 2010; Dickson and Ginter, 1987). Pointing to the importance of strategic
segmentation research, Piercy and Morgan (1993, p. 138) note, “[…] there have been few
serious attempts in the available literature to formalize the underlying theoretical base
implicit in most segmentation models, or to attempt to find empirical support”.
An important approach to bridging theory and practice in a field is the development
of useful schemata, such as a typology. Beyond the methods-focused articles noted
above, a few published schemata for segmentation exist, but they are primarily
presented without a strong theoretical base (i.e. atheoretical) and designed as descriptive
articles (Wind, 1978; Cross et al., 1990; Piercy and Morgan, 1993; Jenkins and McDonald,
1997; Sausen et al., 2005; Boejgaard and Ellegaard, 2010). Specifically, these articles
neither aim to define a theoretical basis for how marketing managers go about making
decisions on market heterogeneity (e.g., number of segments) nor identify relationships
between strategic segmentation and implementation. And, given the diversity of prior
work, as Hunt (2010, p. 200) states, “([…] having multiple) schemata for the same
phenomenon is dysfunctional”. Therefore, having a theory-based schema provides an
effective and efficient foundation for aggregating research results and defining testable
propositions to narrow the theory–practice gap.
Based on the cumulative state of segmentation research, the purpose of this article is
to propose a more unified, theory-based typology as an initial step in explaining how the
EJM presence or absence of certain recourses may affect marketing managers’ view of, and
50,12 approach to, their markets via strategic segmentation. Following a resource-advantage
(R-A) based approach (Hunt, 1995), the proposed typology links firm resources to the
marketing manager’s view of market heterogeneity and segmentation execution
decisions and proceed to develop research propositions that more clearly and
meaningfully link theory and practice in strategic segmentation. These propositions are
2194 not intended as a practical roadmap to segmentation, but as predictors of effective
strategic segmentation.
The R-A theory (Hunt, 1995; Hunt and Morgan, 1996; Hunt and Morgan, 1995; Hunt,
2013) is used to describe the relationship between a firm’s available resources and a
marketing manager’s ability to create or execute a strategic segmentation. The R-A
theory reflects firms’ varying ability to obtain resources needed to compete. The R-A
theory’s nine propositions, listed below, link segmentation to the costly resources of
customer and competitive information, the dynamic and heterogeneous competitive
market and the strategic responsibility of managers. Therefore, the R-A theory was
deemed very compatible as a basis for a strategic segmentation typology:
P1. Demand is heterogeneous across industries, heterogeneous within industries
and dynamic.
P2. Consumer information is imperfect and costly.
P3. Human motivation is constrained self-interest-seeking.
P4. The firm’s objective is superior financial performance.
P5. The firm’s information is imperfect and costly.
P6. The firm’s resources are financial, physical, legal, human, organizational,
informational and relational.
P7. Resource characteristics are heterogeneous and imperfectly mobile.
P8. The role of management is to recognize, understand, create, select, implement
and modify strategies.
P9. Competitive dynamics are disequilibrium-provoking, with innovation
endogenous.
This current typology is intended to provide testable propositions covering marketing
managers’ strategic market view (SMV) and strategic market approach (SMA), which
are both linked to a firm’s resource availability and is expected to provide insights into
a substantive, theory-based area of segmentation that is under-researched (an important
contribution to the marketing theory). Additionally, this new typology takes a first step
toward better explaining why many firms do not seek the advantages offered by
segmentation (an important contribution to marketing management practice). We also
suggest that managers who purposefully constrain their segmentation based on
currently available resources may not be performing demand-driven, strategic
segmentation, but rather may be operating more as a supply-driven firm. The remaining
sections of this article proceed as follows: key concepts and underpinnings of
segmentation are introduced; the role and value of classification systems in bridging
gaps between theory and practice are discussed; a new typology of strategic
segmentation is presented and described with two key dimensions of SMV and SMA,
based heavily on the R-A theory; theoretically derived propositions are developed; and Resource-
conclusions, managerial implications and future research opportunities are proposed. advantage
Key segmentation concepts and underpinnings
theory
Segmentation is one of the most important and widely practiced marketing approaches typology
to understanding customers’ needs in a diverse market (Dibb and Simkin, 2001). As
such, firms of varying sizes and with different target customers use segmentation. 2195
Segmentation descriptions and methods can be found in nearly every introduction to
marketing textbook and is the basis of the segmentation–targeting–positioning (S-T-P)
process taught to most undergraduate marketing majors. For nearly 80 years,
researchers and practitioners have been theorizing and investigating the strategy,
methods and implementation underlying this important marketing practice (Smith,
1956, 1995; Frederick, 1934; Hunt, 2011; Chamberlin, 1933).
As one might expect from a topic as broadly practiced, researched and taught as
segmentation, scholars have produced voluminous literature, demonstrating “persistent
academic interest” in the topic (Wedel and Kamakura, 2000, p. 6). However, despite the
hundreds of articles published on segmentation, the vast majority of the literature
focuses on statistical methods of creating segmentations, rather than on strategic
approach to segmentation. And, as noted above, scholars continue to call for theoretical
research to provide new guidance in strategic segmentation (Quinn and Dibb, 2010; Day,
2011).

What is segmentation?
Market segmentation has been defined as “the process of dividing the total market into
a number of smaller, more homogeneous submarkets, termed market segments”
(Danneels, 1996, p. 36). In its simplest form, segmentation has been practiced for
hundreds of years. Any baker or candlestick maker who offered one product for the
wealthy and one for the less affluent could be viewed as practicing basic market
segmentation. In modern marketing management and strategy, however, segmentation
has assumed a prominent role as the first stage in the S-T-P approach that is widely
taught in business schools and is “among the articles of faith” in business and marketing
(Sinha and Rosenthal, 2009, p. 243). Segmentation is used to identify and define
segments in the market in which a firm competes and is used to better understand both
consumer (Lawson, 2002) and business markets (Barry and Weinstein, 2009).
Segmentation has different practical applications and can be performed for
either strategic, managerial or operational purposes (Piercy and Morgan, 1993).
Operational segmentation, one end of the Piercy and Morgan (1993) continuum of
market segmentation, typically focuses on the execution of the marketing mix and
informing sales and marketing operational planning. Managerial segmentation’s
purpose is to guide resource allocation, marketing planning and operational
segmentation. Strategic segmentation (the focus of this study) helps define corporate
mission, vision and strategic intent and focuses the firm on “fundamental customer
benefits sought in different parts of the market” (Piercy and Morgan, 1993, p. 131).
Strategic segmentation includes the following nine steps succinctly outlined by Hunt
and Arnett (2004):
(1) identifying bases for segmentation;
(2) using the bases to identify potential market segments;
EJM (3) developing combinations (portfolios) of segments that are strategic alternatives;
50,12 (4) ascertaining the resources necessary for each strategic alternative;
(5) assessing existing resources;
(6) selecting an alternative that targets a particular market segment or segments;
(7) securing the resources necessary for the target(s);
2196 (8) adopting positioning plans for the market offerings for the segments; and
(9) developing marketing mixes appropriate for each segment.

Because the purpose of segmentation is to identify smaller, mutually exclusive

homogeneous groups within a presumed larger heterogeneous market, it is important to
understand the measure of heterogeneity and, by extension, homogeneity (Hunt and
Arnett, 2004). The meaning of heterogeneity is relative and varies depending on the
context in which the term is applied. A brief conceptualization illustrates the importance
of clarity regarding a market’s relative homogeneity in relation to the marketing
objective.
In a market of many individuals, the heterogeneity assumption suggests that
individuals will vary from each other along certain needs, behaviors or attitudes for a
given marketing objective (Hunt and Arnett, 2004). Therefore, by presuming
heterogeneity, we say, “People are different”. To increase homogeneity within each
segment, firms can define a greater number of segments (and possibly offer a greater
variety of products addressing evermore specific needs), Conversely, reducing the
number of segments would increase heterogeneity of each segment, all else equal (Hunt
and Arnett, 2004).
When would defining more segments become undesirable to a firm? Ultimately, the
economic concept that segments have different price elasticities and can, therefore, be
discriminately priced to increase profit (Chamberlin, 1933; Frederick, 1934) offers an
appropriate and generalized test for practical limits to the numbers of segments a
marketing manager may choose in a strategic segmentation. Within a market, some
customers may have higher price elasticity than others for a given offer and, if these
customers can be identified as a segment, a firm can maximize profits on the same
product by raising prices for segment(s) that would pay more and maintaining prices for
those with lower elasticity (Chamberlin, 1933; Smith, 1956). At its essence, this is the
purpose of market segmentation, to produce superior financial performance (Hunt and
Arnett, 2004).
However, in seeking superior financial performance, a firm may choose to alter one or
more elements of the marketing mix to each segment (Hunt and Arnett, 2004).
Adaptations of the marketing mix require resources that are varied, imperfectly mobile
and incur additional costs (Hunt, 1995). Therefore, resource availability must be
considered when a marketing manager determines the number of segments, as the
tradeoff will impact the firm’s financial performance. That is, the managers must weigh
the costs of resources to address additional segments against any increase of profits
accrued from higher price elasticity of the added, more discreet segments. As hundreds
of journal articles show, analytical methods can produce a great number of more
empirically homogeneous groups, but when additional segments do not lead to superior
financial performance, practical segment homogeneity has been exceeded (Hunt and
Arnett, 2004).
Market segmentation vs Product differentiation Resource-
Over several decades, the literature has presented market segmentation as intertwined advantage
with product differentiation, clouding the terms and creating ambiguity. Smith’s
seminal segmentation article (1956) suggested market segmentation and product
theory
differentiation are alternative marketing strategies, while others view them as typology
complementary (Dickson and Ginter, 1987). More recently, Hunt (2011) concluded that
product differentiation does not contradict the premise of a firm assuming a 2197
heterogeneous market, and therefore the firm could also be engaged in both product
differentiation and market segmentation. Faced with a market and limited resources, a
firm practices product differentiation as a supply-side approach to the market, which
does not preclude the market from being naturally heterogeneous (premises 8 and 9,
Varadarajan, 2010).
There are practical limits to defining evermore-homogeneous segments and,
likewise, there are practical limits to altering products to meet various demands.
Therefore, there are times the “marketer should accept divergent demand as a market
characteristic […] and adjust marketing strategy accordingly” (Smith, 1956, p. 4, italics
in original). In such an environment, the marketer can attempt to cover as many needs of
a heterogeneous market segment (or an entire market) as possible with a single product,
but use promotion to converge marginal demand on existing supply (Smith, 1956). That
is, the firm would ignore heterogeneity and attempt to find the “center” of the market’s
needs. Aiming product design, promotion and distribution to this center would
maximize value exchange for the firm and customers whose needs are at the center
point. But surrounding the center is an extension of customers who may purchase a
less-than-optimal offering under the concept of satisficing their needs, thus avoiding
continuing costs to the firm of seeking the optimal product (Shugan, 1980; Simon, 1956;
Simon, 1979). This view supports and explains the actions of mass marketers
approaching a heterogeneous market as if it were a single homogenous market (Hunt
and Arnett, 2004).
Given the foundations of segmentation and the theory–practice gap noted in the
literature, we are providing an extended definition of segmentation that includes both
the theoretical and practical dimensions of segmentation. Starting with Danneel’s (1996)
definition and including contributions from Hunt and Arnett (2004), we extended the
definition of strategic market segmentation to the following: the process of practically
dividing the total market into a number of smaller, more homogeneous sub-markets,
termed market segments, designed to achieve superior financial performance. Under
this definition, no segmentation strategy could ignore resources (available or absent)
and meet the practical and superior financial performance criteria. In tandem, based on
Chamberlin (1933), Smith (1956), (Varadarajan 2010) and Hunt (2011), we define product
differentiation as follows: supply-driven offerings that may include substantively the
same product to multiple segments but are attempting to meet the segments’ needs not
with physically different products, but by differentiating the product in the marketplace
through distribution and promotion. Figure 1, adapted from Smith (1956), illustrates
these two definitions. Product differentiation is supply-driven and, in its most extreme
form, is “bending of demand to the will of supply”. Whereas market segmentation is
demand-driven and is an “adjustment of product and marketing effort to customer or
user requirements” (Smith, 1956, p. 5; Varadarajan, 2010). It should be noted that a firm
differentiates itself in the market through variation of the marketing mix vis-à-vis
EJM competitors, which involves both intrinsic decisions that are typical of a demand-driven
50,12 firm (e.g., product design and features) and extrinsic decisions (e.g., promotion and
distribution choices), which can be used by either firm type. As we will discuss, the
typology looks first at the implications of resources on market segmentation and next at
the resource implications for product differentiation.
Beyond these definitions, we see a gap in the literature where an unambiguous,
2198 theory-based classification of strategic segmentation could benefit researchers and
practitioners alike by defining modes of viewing the market’s relative heterogeneity and
modes of approaching the market once a segmentation scheme is set. The following
section explains the importance of classification systems and reviews the extant
literature on strategic segmentation classification schema.

Importance of classification systems in research

Classification systems are fundamental to scientific investigation, as they are “[…] the
primary means for organizing phenomena into classes or groups that are amenable to
systematic investigation and theory development” (Hunt, 1991, p. 177). Without the
ability to classify a phenomenon, such as segmentation, it is difficult for researchers to
perform consistent and comparable research (Hunt, 1983). Classification systems have
two main forms, typologies and taxonomies. Typologies are derived from theory and
propose an organization schema based on conceptual dimensions (Smith, 2002).
Whereas, the distinguishing feature of a taxonomy is its empirical basis of classification
from actual observation (Hair et al., 2010). Classification systems can be defined using a
single dimension, for example, objects with (or without) legs. But most useful
classification systems are defined by at least two dimensions (Bailey, 1994), for example,
objects with legs but that are either animate or inanimate separates animals from tables
and chairs.
Researchers use typologies to begin an exploration of a phenomenon. They are useful
in developing heuristics that can be theoretically based, and therefore, represent the
ideal state (Smith, 2002). However, typologies may overlook extant cases or, if poorly
formed, may not maintain exclusivity across dimensional categories (Bailey, 1994). In
contrast, taxonomies are empirically derived and tend to overcome these limitations, but
may be incomplete in dimensions due to limited observational data. Taxonomical views
are important to understand dimensions of the phenomenon as demonstrated by
observations and are particularly useful when documenting normative patterns of a

Figure 1.
Supply- and
demand-driven
market approaches
phenomenon (McKelvey, 1975). The previously noted gap between theory and practice Resource-
in segmentation, coupled with the general dearth of theory-based segmentation schema advantage
suggests that a typology is the appropriate approach, given the stated goals of this
research.
theory
As described in the next section, the extant literature on segmentation classification typology
is taxonomically based and derived from observation, rather than theory. Much of the
literature cites Wind’s (1978) article, which has the advantage of being normative (i.e. 2199
based on common practice), but the disadvantage of being atheoretical, making
hypothesis-based testing difficult.

Key prior segmentation schemas

Six key articles present information about segmentation classification. Four of the
articles are atheoretical, being based on either observation alone or on a previous
atheoretical schema (Wind, 1978; Cross et al., 1990; Jenkins and McDonald, 1997; Sausen
et al., 2005). Of the remaining two, Boejgaard and Ellegaard (2010) focus on
implementation in a business setting, and Piercy and Morgan (1993) create a theoretical
model but with only a single dimension. Table I summarizes the objectives and
limitations of all segmentation classification articles we found currently in the literature.
Table I reveals that, although these articles certainly have contributed to the topic of
classification of strategic segmentation, they do not provide the following key insights:
• a typology of strategic segmentation;
• an investigation of segmentation at the strategy formulation level and its
relationship to resources; and
• an approach to help understand the theory–practice gap in segmentation.

For these reasons, a typology is sought built on existing theoretical frameworks to better
explain why marketing managers so often eschew segmentation.

A typology of strategic segmentation

Within a firm, decisions are made that specifically and strategically affect how the firm
engages the market. Segmentation is one mechanism by which a firm can decode the
market and decide what marketing mix is required vis-à-vis the segments’ needs. The
R-A theory provides a foundation for how firms differentiate along a continuum of no
segmentation (ignoring heterogeneity or choosing to view the market as homogeneous),
to niche or concentrated markets, to segment-of-one approaches (Hunt and Morgan,
1996; Hunt and Morgan, 1995). Variation within this range of how managers view
segmentation can be explained by the firms’ access to resources to both perform and act
on segmentation.
Given the nine propositions of the R-A theory, listed earlier, managers must rely on
imperfectly available resources to both create a strategic segmentation and execute its
inferred actions in the market. Based on managers’ understanding of their firm’s
resources, a typology is described under which managers would have different views of
the market’s relative heterogeneity and different approaches for their market strategy
varying with the firm’s access to resources. Table II shows the linkage between the nine
propositions from the R-A theory propositions and the proposed typology dimensions.
 EJM
50,12

schemas
2200

Table I.

classification
segmentation
Key articles on
Author(s) Research question Relevance Limitations

Wind (1978) What are the problems and perspectives of
segmentation in consumer and business
marketing?
Cross et al. (1990) How do marketing managers make
segmentation implementation decisions
and what are those decisions?
Piercy and What is the strategic view of
Morgan (1993) segmentation?
Jenkins and What are the explicit and implicit views of
McDonald (1997) segmentation?
Sausen et al. What is the taxonomy of strategic
(2005) segmentation that addresses the firms’
need for resolving a marketing objective
and using the correct unit of analysis?
Boejgaard and What does the literature tell us about
Ellegaard (2010) business market segmentation?
The first article proposing a structure to the Summary of experienced-based observations on
full segmentation process, defining steps segmentation; neither qualitatively developed
and activities within each step nor based on theory
This exploratory study is the first to Implementation only, limited scope, based on
approach understanding segmentation by atheoretical work
categorizing activities but is largely based
on Wind (1978)
A literature review and theoretical article Defines only one-dimensional schema
that argues segmentation can be performed
at different levels, strategic, managerial and
operational. Suggests strategic
segmentation is aligned with mission,
vision and strategic intent
Using four case studies, the authors Creates schema based on a small number of
describe how segmentation varies within case studies, does not follow grounded theory
organizations and define the strategic level approach and, therefore, produces atheoretical
as having high customer focus and high schema
corporate integration
Defines strategic segmentation based on Based on an atheoretical schema combining
Jenkins and McDonald and performs an external and internal segmentation schemas
empirical study producing a 2 ⫻ 2
taxonomy showing four segmentation
approaches
Based on literature review, proposes a Focus on business (vs consumer) segmentation
taxonomy of three groupings of activities and on activities instead of dependent variables.
firms should undertake for successful Implementation focus
business market segmentation
implementation

Proposition
P1. Demand is heterogeneous across
industries, heterogeneous within
industries and dynamic
P2. Consumer information is
imperfect and costly
P3. Human motivation is
constrained self-interest seeking
P4. The firm’s objective is superior
financial performance
P5. The firm’s information is
imperfect and costly
P6. The firm’s resources are
financial, physical, legal, human,
organizational, informational and
relational
P7. Resource characteristics are
heterogeneous and imperfectly
mobile
P8. The role of management is to
recognize, understand, create, select,
implement and modify strategies
P9. Competitive dynamics are
disequilibrium-provoking, with
innovation endogenous
Typology
Resource-
Link to strategic segmentation dimension advantage
Varying demand within an industry suggests SMV
theory
natural segments and opportunities for firms typology
to compete by identifying and meeting the
needs of those segments
Consumer segmentation is based on SMV 2201
consumer data; therefore, gaining access to
sufficient data becomes an important and
costly resource. Likewise, having imperfect
information leads to potentially different
assessments of segments by different
competitors
Suggests some managers may be SMA
opportunists and seek a supply-driven
approach as a short-run solution responding
to lack of resources
This begins the cycle and defines the need for SMV
strategic segmentation
Competitive intelligence is imperfect and SMA
costly; therefore, a firm’s assessment of how
to approach the market given the defined
segments may vary with available resources
of this type
Money, expertise, computing power and data SMV and SMA
all play a role in the depth and breadth of
creating, executing and brining a strategic
segmentation plan to market
All resources in P2, P5 and P6 are unevenly SMV and SMA
distributed and available to firms, indicating
that managers should account for resources
required to perform segmentation
After accounting for available resources to SMV and SMA
perform the full strategic segmentation
process, managers must recognize the limits
to current practical segmentation and devise Table II.
a strategy to acquiring resources required to Linkage between the
reach the firm’s strategic segmentation goal R-A theory
Competition causes shifts in strategy, which SMV and SMA propositions and
generates imitation, substitution or proposed typology
innovation dimensions

Typology dimensions
When managers have varying amounts of resources, there is a range of possible
outcomes based on the manager’s view of the relative heterogeneity of the market as well
as the manager’s approach to meeting the target customers’ needs as either supply- or
demand-driven. The proposed typology (as shown in Figure 2) incorporates these two
key dimensions: SMV and SMA.
Because managers’ selections of their position on both the SMV and SMA axes are
dependent on decisions related to resources, namely, resources to identify segments and
resources to meet segment needs – they find themselves in one of the eight cells shown
EJM
50,12

2202

Figure 2.
Typology framework

in Figure 2 and are able to move down or to the left but constrained by resources from
moving up or to the right. The R-A theory (Hunt and Morgan, 1996; Hunt, 1995) is used
to explain the motivations and selections of managers when (consciously or
subconsciously) adopting their position in the strategic segmentation typology. The
proposed typology, then, describes how firms view the relative heterogeneity of the
market (SMV) and how firms approach the target segments based on resource
availability (SMA). We propose that any given firm can be placed within this
two-dimensional continuum in its drive to achieve superior financial performance. The
continuum of each dimension is also more granularly defined, so firms can be more
accurately placed within the typology. The following sections describe the typology Resource-
dimensions in more detail and provide additional linkages to the R-A theory. advantage
theory
Strategic market view typology
The SMV dimension describes a continuum of the firm’s view of the market’s relative
heterogeneity and is based on R-A theory’s concepts of segmentation ranging from
mass-marketers – a special case of perfect or near-perfect competition – to firms that are 2203
capable of increasingly discreet segmentation and seek ultimate relationship marketing
with segments of one. Firms that engage in segmentation can be placed along this
continuum and approximately into one of the four categories: mass marketers,
concentrated marketers, differentiated marketers and segment-of-one marketers
(Figure 2).
When facing decisions about how many segments to attempt to define in their
segmentation schema, managers must balance their desire to have multiple segments
with their ability to accurately identify the segments. All else equal and without
resource constraints, having more segments would benefit the marketing manager, as
each segment would be more homogeneous, providing opportunities to more precisely
target product design, messaging, distribution and price.
However, sufficient resources (e.g. customer data, computing capacity, statistical
expertise) must be available to produce a valid segmentation scheme. The R-A theory
holds that markets are heterogeneous, so (given sufficient data and analytical capacity)
an enlightened manager could believe that segments-of-one are attainable. How a
manager views the market’s heterogeneity should be influenced by the firm’s ability to
define segments. The more segments the manager confidently believes the firm has the
ability to identify, the more heterogeneous the market is therefore assessed. To be clear,
this view is not to imply the enlightened manager actually thinks the market has fewer
potential segments if the manager has fewer resources; rather, it denotes only that his or
her interpretation of the market would be influenced by their available resources.
The SMV is therefore how the manager practically views the market, not how he/she
theoretically or conceptually understands the market. Thus, all else equal, managers
with abundant segmentation resources would tend to view the market as completely
heterogeneous and create segments-of-one. On the other hand, managers with fewer
resources with which to segment the market would view the market as more
homogeneous and not attempt to extract many segments. In an extreme case, a manager
with no segmentation resources may choose not to use segmentation, effectively looking
at the market as only one segment, which has relatively unspecific needs. This view can
be described as “ignoring heterogeneity” (after Hunt, 2011), and firms that take this view
would be implementing what would “[…] properly be considered an alternative to
market segmentation” (Hunt, 2011, p. 81 italics in original).
However, the resource implications do not stop here; there are other constraints when
defining the segmentation scheme related to resources available to execute the
segmentation scheme. To improve financial performance, marketing managers cannot
ignore resource constraints inside the firm but outside the marketing department.
Ultimately, the segmentation schema will be used to guide execution of product design,
sales efforts, promotion, distribution, customer service and other marketing and
operational activities related to delivering value to the customer. According to the R-A
theory, all areas of the organization are faced with imperfectly available and costly
EJM resources. The savvy marketing manager may know that although segments-of-one
50,12 might be created, these segments ultimately must be reachable and actionable across all
departments, not just marketing (Green and Krieger, 1991; Pires et al., 2011; Angell et al.,
2012). If operations or distribution departments are unable to handle segments-of-one,
the segmentation schema is of little use to the company as a whole and will be ineffective
at delivering value to the customer. Therefore, the marketing manager would account
2204 for the resource limitations across the firm’s entire value chain and seek to practically
segment the market. That is, the manager may correctly conclude the market requires
many segments to be effectively addressed. But, if the firm’s resources do not allow
these segments to be efficiently addressed so as to improve financial performance, the
manager’s inferred view of the market would become less heterogeneous.
Firms will vary their number of segments based on their ability to gather and use the
information required to perform a given level of segmentation (Snellman, 2000). This
viewpoint argues that as resources for segmentation become more available, a firm may
specify a greater number of segments and advance to any given point on the continuum.
Firms in the mass marketer category, for example, are not philosophically rejecting
segmentation, but practically rejecting it and, with sufficient resources, may move to be
concentrated marketers or beyond.
At the acme of the continuum, firms may have the abilities and skills to understand,
create, promote and distribute the products based on individual customer’s preferences.
These segment-of-one marketers are “willing and able to change […] behavior toward
an individual customer based on what the customer tells [the firm] and what else [the
firm] knows about that customer” (Peppers et al., 1999, p. 151).
It is important to note that firms are seeking superior financial performance and
operate in a competitive market. Therefore, firms will only acquire and use resources to
“move up” the segmentation continuum if the competitive environment warrants this
action through either a superior value strategy, a lower-cost strategy or a synchronal
(efficiency/effectiveness) strategy (Hunt, 2015). Consistent with Hunt’s (2010) advice
about the usefulness of typologies and other categorization tools, our typology serves to
help managers and leaders define where their firm resides within the framework but the
typology in-and-of-itself is not intended as a roadmap to strategic segmentation
decisions.

Strategic market approach

The SMA dimension (Figure 2) describes a firm’s motivations for selecting one of two
approaches to the market, namely, a priori (supply-driven) and post hoc
(demand-driven), which comprise the horizontal axis of the typology and is based on the
long tradition in literature describing the two approaches from which firms can derive
competitive advantage and superior financial performance (Hunt, 2015; Varadarajan,
2010; Smith, 1956; Green, 1977; Wind, 1978).
After the segmentation schema has been designed and constructed by the marketing
department, the segments are then reviewed for opportunities, and a positioning
strategy is devised to address needs identified for the target segment(s) – the S-T-P
process. To address these needs, the firm has to deliver a product or service that offers
value to the target segments, but firms have varying amounts and types of resources
with which to meet the target segments’ needs. Assuming a firm is not in the
serendipitous place of having its current marketing mix meeting the needs of the new
target customers, a firm with fewer resources may choose to offer its current marketing Resource-
mix by attempting to attract the segment with the only value propositions they can advantage
currently offer and would be deemed supply-driven. Attempting to “bend demand”
(Smith, 1956), the firm would approach the segments by only affecting marketing mix
theory
changes where the increase in cost is lower than the increase in price to the consumer typology
(Varadarajan, 2010). At times, altering promotional messages or making minor changes
in packaging and distribution are an effective basis of firm differentiation (Varadarajan, 2205
2010).
However, if the firm is able to acquire new resources, the firm may be willing to more
substantially update its marketing mix beyond simple promotional and distribution
changes. This firm may retool to develop a new product(s), or make large distribution
changes, along with updating promotion messaging to convey the value of the new
offering. Such a firm is demand-driven. Accordingly, available resources dictate how a
firm approaches the market and segmentation schema.
Green (1977) and Wind (1978) defined these categories to encompass firms that are (a)
supply-driven and approach the market with a product currently on hand (a priori) or (b)
firms that are demand-driven and seek to first understand customer needs and then
develop a product to meet those needs (post hoc). If a firm does not already have a
product that closely meets a target segment’s needs, the firm has an option to either
acquire resources to create the product to meet customer needs or attempt to persuade
the customers their needs can be met with the existing offer (Yankelovich and Meer,
2006). A priori firms do not seek to alter their supply but take a product differentiation
approach to strategic segmentation to understand how to “bend demand” to the
available supply (Smith, 1956). Closely meeting the needs of customers within the
market center using their current marketing mix, a priori firms also position their
product or service so as to bend as many customers on the margins of this target center
toward their offering. A priori firms are executing a short-run strategy and are
supply-driven, in that the resources to meet the segments are already known prior to
segmentation and segmentation merely provides aim to the target (Smith, 1956; Wind,
1978).
Alternatively, firms in the post hoc category are approaching the market without a
bias toward existing products or resources. These firms believe that, if they can discover
unmet needs, they will make use of their existing resources to create products for the
target segments (Wind, 1978). All specific resources might not be accessible, or even
known, to post hoc firms prior to performing segmentation, but the financial resources
are available to acquire the appropriate needed resources post hoc (Yankelovich and
Meer, 2006; Green, 1977). Post hoc firms are executing a long-run strategy and are
“demand-driven” in that resources to meet the segments needs are determined, acquired
and assembled into a functioning offer after segmentation provides guidance as to the
target segment’s needs (Smith, 1956; Wind, 1978).
Regardless of being a priori or post hoc, both approaches involve risk. For
supply-driven firms, management is taking advantage of the resources at hand but may
suffer from long-run competitive pressures as demand-driven firms begin to better
address customer needs. However, demand-driven firms may face market shifts that
occur faster than their ability to acquire and deploy the necessary resources and end up
taking lesser advantage of market share in the short-run. It should be noted that
Varadarajan (2010) states (Propositions 9 and 15) that a heterogeneous market is not
EJM required for differentiation (supply-driven) firms to be effective and that firms can
50,12 achieve superior performance in a competitive industry, all else equal, through
promotion or pricing alone. Our intent with this typology is to account for theoretically
derivable cells and to propose testable propositions that could, once tested, help inform
both theory and practice.
Both supply- and demand-driven firms may perform strategic segmentation, and
2206 both firm types can use data about the segments for targeting, positioning and to guide
strategic distribution and promotion choices. Additionally, both firm types may have
multiple products that are differentiated both intra-firm and intra-market. A priori firms
may differentiate from other firms due to imperfect access to resources, essentially by
default, as no other option exists; whereas post hoc firms may differentiate
systematically in an attempt to better meet segments needs and enter a competitive
market. Interestingly, a priori firms, attempting to approach the market with the
product on hand, may not reach the segment-of-one level of individualization, if the
individual’s needs require product changes.

Theoretically derived propositions

Figure 3 portrays a decision tree illustrating resource-based choices a marketing
manager faces when contemplating strategic segmentation. Each decision in the tree
highlights a proposition related to resource availability, and managers seeking to use
strategic segmentation as a method to improve financial performance would start at the
top-left box.

SMV: R-A theory and heterogeneous markets

Thus, the first decision facing the marketing manager is: “What resources (e.g. data,
expertise) are available to segment the market?” If the manager has low resources on a
continuum to accomplish segmentation, the manager could only perform a simple
segmentation. If there is a high amount of resources to perform segmentation, the
manager could create a segmentation that identifies many segments, possibly even
segments-of-one. However, before making a choice on the number of segments to create,
the manager would then need to consider how many segments could be managed as
creating more segments than can be addressed would not lead to practical segmentation.
Because each segment may require a different marketing mix – some different
combination of product, distribution channel and promotional messaging – the ability of
the firm to create and manage these aspects may limit the range of the marketing mix.
By limiting the range of the marketing mix, the number of segments that can be
practically addressed is also limited. If on a continuum execution resources are low and
segmentation resources are low, the firm is expected to default to the mass marketer.
This mass marketer ignores heterogeneity, viewing the market as homogeneous, and
thus does not attempt identification of the market. This contrasts with mass marketers
who have some amount of either segmentation or execution resources providing an
ability to pass demand (segmentation) or supply (execution) market information along
to the SMA phase.
At the other end of the range, if the firm’s execution resources are high and
segmentation resources are also high, the firm may adopt a segment-of-one approach.
The adoption of a more heterogeneous market view supposes that the firm is in a
competitive environment where increased segmentation can increase financial
 Strategic Market View Resource-
Firm seeks to
improve advantage
performance.
theory
typology
Resources
available to
segment? 2207

Low Moderate High

Segment-
High

Concentrated Differentiated
of-One
Marketer Marketer
Marketer
Moderate

Resources
Mass Concentrated Differentiated
available to
Marketer Marketer Marketer
execute?

Ignore
Low

Heterogeneity Mass Concentrated

Mass Marketer Marketer
Marketer

Strategic Market Approach

Segmentation is
Competition
performed and potential
and other
target segments are
market forces.
selected.

Resources
available alter
Low supply?
High

Firm will be a
Firm will be post
Figure 3.
priori and Marketing manager
hoc and alter
attempt to "bend
marketing mix. strategic
demand."
segmentation
decisions
EJM performance. The typology identifies possible outcomes in a competitive market where
50,12 superior financial value is achieved by viewing the market as having the highest levels
of heterogeneity. The remaining segmentation and execution resource combinations in
Figure 3 describe how firms would be classified into mass marketers, concentrated
marketers and differentiated marketers. Combinations that increase a marketing
manager’s ability to either identify or execute on the resulting segmentation correlate
2208 with the marketing manager’s increased strategic market view of heterogeneity.
Likewise, combinations that limit a marketing manager’s view of the market’s
heterogeneity also will end up limiting his or her ability to define segments and,
therefore, his or her ability to identify and select target segments.
In the first step of the decision tree, the R-A theory accounts for firms that choose to
ignore heterogeneity and address the market as if it was a monolithic entity and does so
by encompassing neo-classical perfect competition as “a special case” (Hunt, 2000,
p. 105). Within neo-classical perfect competition, the market is perfectly competitive
having no variation in price elasticity and, therefore, no segments (Hunt, 2011). As such,
firms with no ability to produce a segmentation of the market would adopt a
homogeneous market view (Hunt, 1995). These firms would be classified as “mass
marketers” who ignore heterogeneity. Therefore:
P1. When segmentation and execution resources are low, marketing managers will
view and operate as if the market has low heterogeneity, approaching
homogeneity.
Assuming the manager perceived sufficient resources were available to segment the
market at some level, the manager is faced with the question as to how effective an
execution of the segmentation schema can be if the number of resulting segments is
high compared to the firm’s ability to manage the number of segments. The R-A
theory “stresses the importance of market segments, [and] a comparative advantage
(disadvantage) in resources” (Hunt, 2000, p. 11). As noted, the R-A theory describes
both supply and demand in markets as heterogeneous (Hunt, 1995), and under the
R-A theory, a comparative advantage exists “[…] when a firm’s resource assortment
enables it to produce a market offering that, relative to extant offerings by
competitors, is perceived by some market segment(s) to have superior value and/or
can be produced at lower costs” (Hunt, 1995, p. 323).
To identify the value proposition sought by segments, a firm must identify the
segments as part of a marketing strategy (Tarasi et al., 2011). However, even when
a firm can identify many segments, if the firm lacks execution resources, it may be
unable to address the many segments identified. Such a firm may focus on only
one segment out of the many, which may need to be sufficiently large to generate
adequate sales (Hunt and Arnett, 2004). Managers at these firms may see the time
and effort to segment the market into many segments as being spent to no
advantage and instead segment the market as if it was only slightly heterogeneous
(concentrated marketing). Those who perceive they have high resources to execute
the segmentation are either differentiated or segment-of-one marketers, depending
on the degree of resources available to both create and execute on segmentation.
That is, the manager’s view of market heterogeneity is aligned with the both the
manager’s perceived ability to segment the market and the manager’s perception of
the firm’s ability to execute on the segmentation. Therefore:
 P2. Of the managers who perceive that they have high resource availability to Resource-
effectively segment the market, managers with insufficient resources to execute advantage
on multiple segments will view the market as only slightly heterogeneous.
theory
P3. Of the managers who perceive they have high resource availability to effectively typology
segment the market, the more resources a manager perceives he/she has to
operationalize the resulting segmentation the more heterogeneous the
manager’s view of the market will be. 2209
Once a manager has established a view of the market and completed a market
segmentation based on his or her view, the manager must consider resources available
to approach the market. If a particular segment’s needs cannot be met by the firm, the
manager is likely to reject this segment as a potential target. Within this iterative
process, the manager must choose target segment(s) from the available identified
segments, taking into account competition and other market forces. Once practicable
target segments have been selected, the needs of the target segments should dictate the
firm’s objectives, but resources at hand to accomplish the objectives may vary and
present difficulties to the manager. Therefore, in selecting and delivering value to the
target segments, the manager is faced with a new set of decisions regarding tradeoffs
between the segment(s)’ needs and available resources to meet those needs. The choices
the manager makes among these tradeoffs define the firm’s SMA, and the next section
describes the relationship between resources and the SMA.

SMA: R-A theory and resource dependency

At this point in the decision tree (horizontal dotted line in Figure 3), the marketing
manager will have identified and described the needs of the market segment(s) he/she
intends to target as part of the strategic segmentation research. Now, the manager must
address the target segments’ needs and the firm may or may not be well-positioned to
meet those needs. The R-A theory defines all resources as “the tangible and intangible
entities available to the firm that enable it to produce efficiently and/or effectively a
market offering that has value for some market segment(s)” (Hunt, 2000, p. 11). These
resources are not uniformly dispersed and are imperfectly mobile and, therefore, firms
must choose how to use the resources they have or how to acquire resources they need
(Hunt, 1995).
Within this context, resources to meet the target segment’s demanded value
proposition are encompassed by a product that meets a need, a distribution network that
reaches the target segment, promotional messaging that conveys the value and
operational capabilities to produce and service the product. If competitors are better
aware of how a resource may meet customers’ needs, the value of that resource rises as
competition for it grows. Hence, imperfect information about the need for a resource
leads to a potential under- or over-valuing of the resource and is a weakness for the firm
with lower-quality information (Porter and Millar, 1985). The choices of which
imperfectly mobile resources to give up and which to obtain represent strategic
tradeoffs the firm must make between short-run profit improvements and the possibility
that competitors may choose to acquire resources to better meet customer needs over the
long-run (Hunt, 1995; Porter and Millar, 1985).
An early decision faced by the marketing manager after the segmentation scheme is
completed and target(s) are selected is an assessment of how well the existing product
EJM meets the needs of the target segment (Wind, 1978; Hunt and Arnett, 2004). If a firm is
50,12 without adequate marketing mix elements to meet the targeted segment’s needs, the
manager is faced with the decision about how to approach the market and may either
bend demand or alter the supply (Smith, 1956; Hunt, 2011). Without sufficient liquid
resources (e.g. cash) to acquire resources needed to alter supply in such a way to
sufficiently meet the segment’s needs, the firm is, by default, supply-driven and may
2210 choose to “bend demand” through extrinsic product differentiation in attempts to sell
existing inventory to the target segments (Smith, 1956; Hunt, 2011). Because these firms’
marketing efforts do not involve improvements to operations or products, they are more
likely to use less-expensive promotion and distribution changes in an attempt to gain
sales with the target segments by bending the segments’ demand toward the available
product supply (Hunt and Arnett, 2004; Smith, 1956). Therefore:
P4. For managers with low alignment between the marketing mix and the target
segment’s needs, the lower the available execution resources, (a) the less likely it
is the manager would recommend altering the product and (b) the more likely it
is the manager would recommend altering promotion or distribution.
However, if there are sufficient liquid resources available to improve any or all parts of
the firm’s marketing mix, managers may choose to do so. Managers who decide to do so
are, by definition, taking a long-run approach to the market due to the time required to
acquire and implement the new resources (Hunt, 1995; Hunt, 2011). Firms in this
category are demand-driven and, managers will decide to enter the market only after
securing the resources needed to meet the segment’s needs (Wind, 1978; Hunt, 2011).
Therefore:
P5. For managers with low alignment between the marketing mix and the target
segment’s needs, the higher the available execution resources, (a) the more likely
it is the manager would recommend altering the product and (b) the more likely
it is the manager would recommend delaying entry into the market.
If the firm happens to have at hand a marketing mix that meets the needs of the targeted
segments, then managers are more likely to enter the market immediately (Hunt, 1995).
Managers in this category do not need to bend demand to meet the supply they have at
hand becaus their supply is fortuitously aligned to the demand (Smith, 1956). Though
companies with high alignment between their marketing mix and the target segments’
needs are better positioned to enter the market (Hunt, 1995; Hunt and Morgan, 1997),
those same firms that are faced with low cash reserves are constrained from expanding
due to a shortage of resources (Hunt, 1995). Available resources beyond the marketing
mix at hand, such as cash, may be constrained such that the managers may not be able
to quickly meet the quantity demanded by the target segment(s) (Hunt and Morgan,
1997; Hunt and Morgan, 1996). Therefore:
P6. When managers perceive high alignment between the firm’s current marketing
mix and the target segments’ needs, but have low execution resources, (a) they
will enter the market and (b) they will delay expanding the number of target
segments.
Finally, some firms are fortunate enough to have at hand a marketing mix that meets the
needs of the targeted segments, and also have ample liquid resources (e.g. cash) to
quickly ramp up supply to meet the quantity demanded from the target segments. These Resource-
firms are well-positioned for competitive advantage and to achieve superior financial advantage
performance. Therefore:
theory
P7. When managers perceive high alignment between the firm’s current marketing typology
mix and the target segments’ needs, and have high execution resources, they
will enter the market immediately and recommend expanding the number of
target segments. 2211

Conclusion, implications and future research

In this paper, we have identified a new R-A theory-based typology of strategic
segmentation by proposing that resource availability is a connecting construct between
a firm’s strategy and strategic segmentation. Whetten (1989) documents four essential
elements that define a complete theory and, therefore a theoretical contribution. They
are:
(1) what (which variables, constructs and concepts are selected to support the
explanation);
(2) how (asking how are the variables related);
(3) why (what are the psychological, economic or social factors that define the
relationships); and
(4) who/where/when (defines limitations of the propositions).

In this context, the typology uses variables (the What) related to specific resources
required to perform a given step of the strategic segmentation process. The process
steps themselves are interrelated with specific resources and, these steps describe a
marketing manager’s view of the market’s heterogeneity (the How). We propose that
managers may be consciously aware and measure and assess their resources (an
economic Why) or may be subconsciously aware and not measure or assess resources
but base their decision on experience, feel or convenience (a sociological agency Why).
These decisions foreshadow the ultimate market strategy related to segmentation. As
noted, the typology assumes (as does the R-A theory) a market of competitors, each
seeking superior financial returns and as such is limited to active, competitive markets
(the Who/Where). Likewise, the typology is limited in the sense that not all positions of
the theoretical framework may be filled at any given time in any given market (the
When).
Firms with limited resources to segment and approach the market are forced to make
significant tradeoffs. Such tradeoffs are the essence of strategy (Hunt, 1995; Porter and
Millar, 1985) and, as this typology describes, resource alignment to strategic
segmentation is a focal manifestation of strategic information gathering, planning,
decision-making and execution. However, they typology does not presume that all
managers have complete information, the ability or the motivation to perform the
required strategic responsibility. As firms approach the market, resource allocations
that signal to marketing managers a short-run, supply-driven approach will cause those
managers to view the market as less heterogeneous, leading to fewer segments and less
market information. Firms that allocate resources to be demand-driven are signaling a
long-run approach and marketing managers will respond by viewing the market as
EJM more heterogeneous, identifying more segments and facilitating the acquisition of
50,12 customer information that guides strategic decision-making.
Clearly, firms that allocate resources toward creating an effective segmentation, the
efficient execution of the segmentation and the market approach of being
demand-driven are signaling to marketing managers that the firm requires a deep
understanding of what generates customer value, and marketing managers respond by
2212 viewing the market as more heterogeneous. This cycle is virtuous, as deeper customer
insights can catalyze deeper strategic market thinking, leading to products that meet
even more of the customers’ needs. However, the potential also exists for a vicious cycle
in firms that allocate insufficient resources to segmentation and its execution, but seek
to approach the market in the short-run with product on hand. These firms will likely
grow further out of touch with customers and be faced with less market intelligence to
guide future strategic market thinking (Snellman, 2000).
Future model building and initial empirical testing of aspects of this typology should
first demonstrate that resource allocation (in the case of segmentation creation
resources) and availability (in the case of segmentation execution resources) have a
direct relationship to managers’ views of market heterogeneity. In addition, empirical
testing should also confirm that a firm’s resources are correlated with its market
approach (supply- or demand-driven) and that market-based intelligence in the form of
customer needs are linked to the market approach. In addition, the typology should be
tested empirically to demonstrate evidence of the relationship between a firm’s position
within the typology and its long-term performance – that is, do firms who choose to view
strategic segmentation as an investment in understanding and serving highly
heterogeneous markets perform better?
Ultimately, when developing a strategy, managers envision an end (strategic goal)
that provides a competitive advantage and produces superior financial results (Hunt
and Morgan, 1995). A successful long-term strategy seeks to improve the firm’s position
by obtaining the means (resources) either through acquisition, substitution or
innovation (Hunt and Morgan, 1995). The typology accounts for two distinct views
about the marketing manager’s understanding and accounting for resources. The first
view is that for efficient strategy the marketing manager must be aware of available
resources within and outside of marketing. The propositions predict a direct
relationship between managers who have developed a definitive perception (factual or
not) of the amount of resources and the heterogeneity of the market. The second view is
that for effective strategy the marketing manager must look beyond the currently
available resources and seek to acquire resources that will allow the firm to be
advantaged within a more heterogeneous market. Therefore, managers who place too
much emphasis on short-run resource constraints can easily miss strategic
opportunities where new resources could be acquired or substituted, or where an
innovation could change the market.
Marketing managers responsible for strategic segmentation may have insufficient
resources to adequately frame the market for strategic assessment, or they may be
biased by the lack of the firm’s execution resources against creating a strategic
segmentation that represents the true heterogeneity of the market. When either of these
factors occurs, strategic segmentation fails in its primary goal of understanding the
future market opportunity and, by extension, fails in allowing managers to bridge the
current state to the future state (Liedtka, 1998).
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Corresponding author
Andrew T. Thoeni can be contacted at: andrew.thoeni@ju.edu

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