Some firms, especially companies with limited funds or those who feel they need to move quickly to get their product to market, will stop the search for segmentation variables at the Stage 1 level. However, moving beyond Stage 1 segmentation offers a rich amount of customer information that will allow marketers to more effectively and efficiently target customers’ needs.

To segment using Stage 2 variables marketers must use market research techniques that help gain insight into customers’ current purchase situation and the environment in which the customer operates. Information at this stage includes learning what options customers have chosen to satisfy their needs, what circumstances within customers’ environment could affect how purchases are made, and understanding local conditions that could impact purchase decisions. Marketers might locate some of this information through the same sources used in Stage 1 (e.g., may find out brands most frequently purchased) but most of these variables require the marketer to engage in at least casual contact with customers in the market. This can be done through primary research methods, such as surveying the market, having sales personnel contact customers, purchasing research reports from commercial research firms or hiring consultants to undertake research projects. The cost and time needed to acquire this information may be significantly greater than that of Stage 1 segmentation.

Segmentation Variables
Consumer Markets
Segmentation Variables
Business Markets
Current Purchasing Situation
brands used, purchase frequency, current suppliers
Purchase Ready
possess necessary equipment, property, knowledge and skill sets
Local Environment
cultural, political, legal
Current Purchasing Situation
brands used, purchase frequency, current suppliers
Purchase Ready
possess necessary equipment, property, knowledge and skill sets
Local Environment
cultural, political, legal
Customers Served by the Business
identify the business’ market
Business’ Perceived Image
identify how targeted businesses are perceived by their customers
Cite: Stage 2 Segmentation Variables (2014). From Targeting Markets Tutorial. KnowThis.com. Retrieved August 30, 2014 from http://www.knowthis.com/targeting-markets/stage-2-segmentation-variables