3.2 Bases for market segmentation
The first step in developing a segmentation strategy is to select the most appropriate base(s) on which to segment the market. Nine major categories of consumer characteristics provide the most popular bases for market segmentation:
| 1. |
Geographic segmentation: Region, city size, density of area, climate. |
| 2. |
Demographic segmentation: Age, sex, marital status, income, education, occupation. |
| 3. |
Psychological segmentation: Needs-motivation, personality, perception, learning -involvement, attitudes. |
| 4. |
Psychographic: Lifestyle. |
| 5. |
Sociocultural segmentation: Cultures, religion, subcultures (Race/ethnic), Social class, Family life cycle. |
| 6. |
Use-related segmentation: Usage rate, awareness status, Brand loyalty. geodemographics. |
| 7. |
Use-situation segmentation: Time, objective, location, person. |
| 9. |
Hybrid segmentation: Demographics/psychographic. |
Geographic segmentation
Geographic segmentation is a useful strategy for many marketers. It refers to the classification of market into various geographical areas. A marketer cannot have similar strategies for individuals living at different places.
3.2 Bases for market segmentation
It is relatively easy to find geographically-based differences for many products.
Geographic segments can easily be reached through the local media, including newspapers, TV and radio and regional editions of magazines. Geographic segmentation is done by location and climate.
Location: In geographic segmentation the market is divided by location. People who live in the same area share some similar needs and wants that differ from those of people living in other areas.
Climate: Consumers in hot climates require different products than the ones living in cold areas. There are also some divergent consumer purchasing patterns among urban, suburban, and rural areas.
Demographic segmentation
Demography refers to the vital and measurable statistics of population. Demographics help to locate a target market, whereas psychological and socio cultural characteristics help to describe how its members think and how they feel. Demographic information is often the most accessible and cost-effective way to identify a target market. This segmentation includes age, gender, and marital status.
Age: Product needs and interests often vary with consumer's age. Marketers have found age to be of a particular useful demographic variable for market segmentation. Age implies a number of underlying forces. -Age effects which are occurrences due to chronological age, and cohort effect which are occurrences due to growing up during a specific period of time.
3.2 Bases for market segmentation
Gender: Both men and women have different interests and preferences, and thus the need for segmentation. Women for example are the main users of hair coloring and cosmetics and men are users of tools and shaving preparations. Therefore organizations need to have different marketing strategies for men which would obviously not work in case of females. A woman would not purchase a product meant for males and vice a versa.
Marital Status: Marketers are interested in the number and kinds of households that buy or own certain products. They are also interested in determining the demographic and media profiles of household decision maker to develop appropriate market strategies. For example, travel agencies would not have similar holiday packages for bachelors and married couples.
Income: Consumers in different social classes vary in terms of values, product and customs. If we consider income, we find that marketers divide the consumers into small segments as per their income. Individuals are classified into three segments according to their monthly earnings. High income Group, Mid Income Group, Low Income Group.
Psychological segmentation
Consumer segmentation strategies are often based on specific psychological characteristics that are the inner and intrinsic qualities of the individual such as motivation, perception, learning and attitudes. This...
3.2 Bases for market segmentation
...segmentation is also called Psychographic segmentation: This study is a kind of lifestyle analysis. The basis of such segmentation is the lifestyle of the individuals. The individual's attitude, interest, value help the marketers to classify them into small groups. Psychological segmentation is important because it identifies promising consumer segments that are likely to be responsive to specific marketing messages. The psychographic profile of a consumer segment is thought of as a composition of consumer's measured activities, interests and opinions referred to as (AIOs).
Socio cultural segmentation
This socio cultural segmentation includes sociological group and cultural variables. This segmentation includes family life cycle, social class and culture, subculture and cross culture.
Family Life Cycle: Family life cycle segmentation is based on the premise that many families pass through similar phases in their formation, growth, and final solution. At each phase, the family unit needs different products and services.
Social Class: Social class (or relative status in the community) can be used as a base for market segmentation. This is measured by weighted index of several demographic variables, such as education, occupation, and income. The concept of social class implies a hierarchy in which individuals in the same class generally have the same degree of status, while members of other classes have either higher or lower status.
3.2 Bases for market segmentation
Culture, subculture, and cross-culture: Some marketers have found it useful to segment their domestic and international markets on the basis of cultural heritage, because members of the same culture tend to share the same values, beliefs, and customs. Marketers who use cultural segmentation stress specific, widely held cultural values with which they hope consumers will identify. Cultural segmentation is particularly successful in international marketing, but it is important for the marketer to understand the target country's beliefs, values, and customs.
Use-related segmentation
An extremely popular and effective form of segmentation categorizes consumers in terms of product, service, or brand usage characteristics. It includes rate of usage, awareness status, and brand loyalty.
Rate of usage: This segmentation differentiates among heavy users, medium users, light users, and nonusers of a specific product, service, or brand. Most marketers prefer to target their advertising campaigns to heavy users, rather than spend considerably more money trying to attract light users.
Awareness status: This segmentation encompasses the notion of consumer awareness of the product, interest level in the product, readiness to buy the product, or whether consumers need to be informed about the group.
3.2 Bases for market segmentation
Brand Loyalty: Marketers try to identify the characteristics of their brand-loyal consumers so that they can direct their promotional efforts to people with similar characteristics in the larger population. Marketers stimulate and reward brand -loyalty by offering special benefits to consistent or frequent customers.
Usage-situation segmentation
Marketers recognize that the occasion or situation determines what consumers will purchase or consume. Marketers try to encourage the notion of the suitability of certain products for certain situations; others try to break consumer habits. Many products are promoted for special usage occasions. The greeting card industry, for example, stresses special cards for a variety of occasions that seem to be increasing, almost daily. The florist and candy industries promote their products for Valentine's Day.
Benefit segmentation
Marketers and advertising executives constantly attempt to identify the one most important benefit of their product or service that will be most meaningful to consumers. These benefits can be financial security, comfort, proper fit, backache relief. Changing lifestyles play major role in determining the product benefits that are important to consumers, and provide marketers with opportunities for new products and services.
3.2 Bases for market segmentation
Hybrid Segmentation Approaches
Marketers commonly segment markets by combining several segmentation variables than relying on a single segmentation base. This can be psychographic-demographic profiles and geodemographic segmentation
Psychographic-Demographic profiles: By combining the knowledge gained from both demographic and psychographic studies, marketers are provided with powerful information.
Geodemographic segmentation: This type of hybrid segmentation scheme is based on the notion that people who live close to another are likely to have similar financial means, tastes, preferences, lifestyles, and consumption habits.