The process of niche development culminates with segmentation and understanding of target audiences. Market segmentation can take two basic forms:
- Top-down (outside-in, centripetal) segmentation entails dividing up the total population into segments based on select variables (geographic and demographic first, then psychographic and behavioral).
- Bottom-up (inside-out, centrifugal) segmentation takes the individual as the starting point and groups her with other individuals by select characteristics (behavioral and psychographic first, then demographic and geographic).
Bottom-up segmentation holds significant benefits compared to top-down segmentation, all of which give it a significant edge in sustainable marketing. It aims to gain an understanding of individuals in the center of marketing, and only then to segment them into groups. In a sense, it zooms out rather than in; it allows for focused world outlook rather than tunnel vision.
Bottom-up segmentation allows for adding variables to group individuals by, which, in turn, enables sustainable marketers to grow market segments and expand niches. Most importantly, by placing a premium on what members of a target audience as individuals have in common, rather than what divides them, bottom-up segmentation favors cultivating relationships and building communities.
