The segmentation mincer (Koch)

The Segmentation Mincer provides a structured test for deciding whether two proposed product-market segments are strategically distinct or should be analysed as one.

When to use it

Use it when segment boundaries feel arbitrary or when a more disciplined comparison would improve strategy development.

Origins

Richard Koch and former L.E.K. colleagues developed the tool in the nineteen-eighties. It converts the logic of cluster analysis into a managerial questionnaire: compare competitors, customers, economics and barriers, then use the combined evidence to judge whether separation is meaningful.

What it is

A segment is strategically useful when the competitors, customer needs, economics or capabilities required to win differ enough to justify separate analysis and action. Superficial differences in product name or geography do not automatically meet that test.

The Mincer asks the same questions of every pair and applies weights to their answers. Similarity receives a negative score; difference receives a positive one. A positive total supports separation, while a negative total supports combining the areas.